Assignment title: Information
3. Your project team in XYZ gold mine was assigned to sink a 2.5 kilometers deep ventilation shaft
and excavating space for a station at the bottom. The plan was to sink the shaft within 24
months at a cos****** $******00 per meter of shaft depth. For the station at the bottom, 30,000
cubic meters of rock would have to be excavated within 3 months at a cos****** $******per cubic
meters. The plan assumed a uniform earned value over time. After the work had begun, the
scope of the project was changed to include excavation for a new station halfway down the
shaft (as shown in figure below) with a volume of 20,000 cubic meters.
It was agreed that the additional work would have to be done at the same excavation rate as
the bottom station, but since removal of the rock required hoisting only 1500 meters instead
of 2.5 kilometers for the bottom station, the team agreed on the cos****** $******er cubic meters
for the new station. Since limited working space and available resources would delimit the
amount of work that could be done simultaneously, everyone agreed that the new station
would delay the sinking of the shaft. After 15 months, the shaft had reached a depth of 1800
meters below surface and excavation for the halfway station was completed. The actual cost at
this time was 14 million ********s, which was more than was budgeted for the period. This
provoked a cash-flow issue at that stage and your executive management requested an earned
value report. Information on the relative amounts of time spent on excavating the new station
and sinking the shaft was not available.
(i) Calculate cost variance, schedule variance, time variance, and critical ratio
(ii) Prepare a graph showing initial plan and the changed plan and indicate earned value
and actual cost after 15 months.
(iii) Regarding the cash-flow problem that was aggravated by the high rate of spending,
discuss the desirability of performing projects faster than planned.