PART 1: What is Cost Management? It is the project manager's job to satisfy project stakeholders while continuously striving to reduce and control costs. There are four processes for project cost management. List the for processes and a brief description? Cost Management Process Brief Description 1 2 3 4 SIMULATION: Given the following information for a one-year project, answer this following questions. Recall that PV is the planned value. EV is the earned value. AC is the actual cost, and BAC is the budget at completion. PV = 522,000 EV = 520,000 AC =525,000 BAC =5120,000 a. What is the cost variance, schedule variance, cost performance index (CPI}, and schedule performance index (SPI) for the project? b. How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget? . Use the CPI to calculate the estimate at completion (EAC) for this project. IS the project performing better or worse than planned? d. Use the SPI to estimate how long it will take to finish the project. e. Sketch the earned value chart for this project, using figure 7-6 as a guide. Insert sketch below. PART 2: SIMULATION: Earned value management involves calculating three values for each activity or summary activity from the project's WBS: 1 The planned value (PV) is the authorized budget assigned to scheduled work. Suppose that a project included a summary activity of purchasing and installing a new web server. Suppose further that, according to the plan, it would take one week and cost a total of 510,000 for the labor hours, hardware, and software. 2 The actual cost {AC) is the realized cost incurred for the work performed on a activity during a specific time period. For example, suppose that it actually took two weeks and cost 520,000 to purchase and install the new web server. Assume that $15,000 of these actual costs were incurred during week 1 and 55,000 was incurred 3 The earned value (EV] is the measure of work performed expressed in terms of the budget authorized for that work. It cannot be greater than the authorized PV budget for a component as it is calculated as the sum of the PV of the completed work. Based on the assumptions above, please list the earned value calculations for on activity after week 1. Activity Week 1 1 Earned Value (EV) 2 Planned value (PV) 3 Actual cost (AC) 4 Costvariance (CV) 5 Schedule variance (5V) 6 Cost performance index (CPI) 7 Schedule performance index (SPI)