HCIS 410 Week 4 Project Budgeting, Tracking and Controlling Example

A Cost Performance Index of 0.88 at Week Eight: Budgeting, Earned Value Tracking and Change Control for a Hospital's Video Interpreting Project

[Student Name]

University of Phoenix

HCIS/410: Project Planning and Implementation in Health Care

Week 4 Assignment

[Instructor Name]

[Date]

The hospital, the budget and the week-eight figures are composites written for a model paper; methods come from the sources listed.

At the week-eight status meeting for a composite community hospital's video remote interpreting project, the finance analyst said spending was close to plan: $118,000 spent against $120,000 budgeted to date. The project manager disagreed that the project was on track. This paper explains why, using the budget built from the charter, earned value measures and the change control process that followed.

Building the Time-Phased Budget

The charter set a budget at completion of $214,000. The project manager spread it across the 13-week schedule by work package: tablets and stands purchased in week 3, network work in weeks 2 to 6, the interface in weeks 2 to 6, testing in weeks 7 and 8, training in weeks 9 to 12 and interpreting minutes from the pilot onward. The cumulative planned spending curve, the cost baseline, reaches $120,000 at the end of week eight.

Earned Value Explained

Earned value management compares three numbers. Planned value is the budgeted cost of the work scheduled to be done by a date. Earned value prices the work that is really finished at the rates the budget assigned to it. Actual cost is what was spent to complete it (Fleming & Koppelman, 2010). Anbari (2003) described how these measures combine into variances and indexes that show cost and schedule performance and support forecasts, which is why spending alone can mislead.

The Week-Eight Numbers

Planned value at week eight was $120,000. Actual cost was $118,000. The project manager then valued the work completed: tablets and network work were done as planned; the interface was only about 75% complete instead of fully built and tested; training materials had not started. The budgeted value of the work completed, the earned value, was $104,000.

Variances and Indexes

Subtracting actual cost from earned value, $104,000 less $118,000, gives a cost variance of negative $14,000. Subtracting planned value from earned value, $104,000 less $120,000, gives a schedule variance of negative $16,000. The cost performance index is earned value divided by actual cost, 0.88, meaning the project was getting 88 cents of planned work for each dollar spent. The schedule performance index is earned value divided by planned value, 0.87, meaning 87% of the planned work was complete. Spending matched the plan only because the project was spending on the wrong things, rework and extra minutes, rather than on finished work.

Causes

The interface needed rework after testing showed that the documentation template did not save the interpreter's identification number, landing the task near its pessimistic estimate of seven weeks. Pilot units also used about 40% more interpreting minutes than forecast, a sign of good adoption but a budget pressure.

Forecasting the Cost at Completion

If current cost performance continues, the estimate at completion is the budget at completion divided by the cost performance index: $214,000 divided by 0.88, about $243,200, roughly $29,200 over budget. The project manager judged this too pessimistic for the fixed costs, such as tablets, and prepared a bottom-up estimate of $231,000, driven mainly by interpreting minutes.

Choosing What to Protect

The sponsor had to decide which constraint mattered most. The inpatient go-live date was tied to a staffing plan for the spring, and the budget came from a fixed language services allocation. Scope was already tight. The sponsor chose to protect the inpatient date and the core scope, accept a small budget increase for higher use, which reflected success rather than waste, and let the clinic date move one week.

Corrective Actions

First, the interface team added a second analyst for two weeks, funded by the contingency, to finish rework. Second, the go-live sequence was adjusted so that clinics go live one week after inpatient units, protecting the April 6 inpatient date. Third, the language services lead negotiated a lower per-minute rate for volume above the forecast, since higher use was the goal.

Change Requests

Two change requests went to the sponsor under the charter's authority rules. The first moved clinic go-live to April 13, a one-week schedule change. The second increased the interpreting line by $12,000 for the first year, offset partly by the negotiated rate. The sponsor approved both, and the cost and schedule baselines were updated.

The Revised Status Report

The status report now shows planned value, earned value and actual cost each week, with the two indexes and a short explanation, instead of spending against budget alone. It uses green, yellow and red status for scope, schedule, cost and risk, with yellow on schedule and cost at week eight and green on scope and risk.

Communicating the Numbers to the Sponsor

The sponsor, a chief nursing officer, does not use earned value terms every day, so the project manager translated them. The status report said: we have finished about 87% of the work we planned by now, and each dollar has bought about 88 cents of planned work. It then named the two reasons and the three actions in plain words. The sponsor later said this was the first IT status report she had read that told her what to decide rather than what had happened. Numbers matter in control only if the people who can act on them understand them.

Controlling Scope as Well as Cost

During week seven, two clinic managers asked to add interpreting for billing calls and for telehealth visits, both listed as out of scope in the charter. Neither became part of the project. The project manager logged both requests, explained the exclusions and forwarded them to the telehealth team and to the evaluation stage. Scope creep often arrives as reasonable requests from supportive stakeholders, which is why exclusions written at the start are so useful at week seven.

Tracking Beyond the Numbers

The project manager also tracks the risk log, open issues and decisions made, following project management guidance that control includes monitoring risks and work performance, not only money (Project Management Institute, 2021).

Conclusion

At week eight, spending looked on plan, but earned value showed the project behind schedule and over cost, with indexes of 0.87 and 0.88. Tracing the variances to interface rework and higher use, forecasting the cost at completion and acting through formal change requests brought the project back under control with a small, approved increase in budget and a one-week shift for clinics.

References

Anbari, F. T. (2003). Earned value project management method and extensions. Project Management Journal, 34(4), 12-23. https://doi.org/10.1177/875697280303400403

Fleming, Q. W., & Koppelman, J. M. (2010). Earned value project management (4th ed.). Project Management Institute.

Project Management Institute. (2021). A guide to the project management body of knowledge (PMBOK guide) (7th ed.). Project Management Institute.