exercises

• you are hired to evaluate software project.you have got CPI and EV but not AC. CPI is  0.90 and EV is 170.000$ . How much money is spent on the project?

CPI=EV/AC then AC=EV/CPI = 188.888 $

• Calculating the NPV and BCR for these alternatives gives the following results.

Project Alternative 1

Costs = £70m

Benefits = £104m

NPV = £100m - £70m = £34m

BCR = 100m/70m = 1.43



Project Alternative 2

Costs = £7m

Benefits = £12m

NPV = £12m - £7m = £5m

BCR = 12m/7m = 1.7

From this simple example it can be seen that while both alternatives provide a net positive outcome, the NPV and BCR methods of obtaining results provide slightly different outcomes. Using NPV suggests project alternative 1 provides the better outcome as the NPV of £34m is greater than the NPV of alternative 2 (£5m). However, using the BCR method alternative 2 would be chosen as a BCR of 1.7 is greater than the BCR of 1.43.

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