PMBOK Earned Value Management (EVM) 3 — Questions and Answers
Question 1: A project has EAC of $620,000 and BAC of $580,000. What does this indicate?
- The project is expected to finish $40,000 over budget (Correct answer)
- The project is expected to finish $40,000 under budget
- The project is ahead of schedule
- The project's CPI is greater than 1.0
Correct answer: The project is expected to finish $40,000 over budget
When EAC > BAC, the project is forecasted to exceed its original budget; VAC = BAC - EAC = -$40,000.
Question 2: Which EVM formula should a project manager use when the current cost variance is expected to continue throughout the project?
- EAC = AC + (BAC - EV)
- EAC = BAC / CPI (Correct answer)
- EAC = AC + ETC
- EAC = BAC - EV + AC
Correct answer: EAC = BAC / CPI
EAC = BAC / CPI is used when current performance trends (cost inefficiencies) are expected to persist for the remainder of the project.
Question 3: In EVM, the term 'Planned Value' (PV) is also known as:
- Budgeted Cost of Work Scheduled (BCWS) (Correct answer)
- Actual Cost of Work Performed (ACWP)
- Budgeted Cost of Work Performed (BCWP)
- Estimate to Complete (ETC)
Correct answer: Budgeted Cost of Work Scheduled (BCWS)
PV was historically called BCWS (Budgeted Cost of Work Scheduled) in older EVM literature and represents the authorized budget for scheduled work.
Question 4: A TCPI of 1.15 based on EAC indicates:
- The remaining work must be done 15% more efficiently than planned (Correct answer)
- The project is 15% ahead of schedule
- The remaining work can be done 15% less efficiently than planned
- The project CPI is 1.15
Correct answer: The remaining work must be done 15% more efficiently than planned
TCPI > 1.0 means you need better-than-planned cost efficiency on remaining work to meet the target (EAC in this case).
Question 5: When would a project manager most likely report SPI as misleading near project completion?
- SPI approaches 1.0 at project end regardless of actual schedule performance (Correct answer)
- SPI becomes negative when the project is late
- SPI cannot be calculated without a baseline
- SPI equals CPI at project completion
Correct answer: SPI approaches 1.0 at project end regardless of actual schedule performance
As projects near completion, EV converges toward BAC and PV converges toward BAC, causing SPI to approach 1.0 even if the project is late.
Question 6: A project manager calculates ETC as EAC - AC. This approach assumes:
- Future work will proceed at the efficiency implied by the EAC forecast (Correct answer)
- The original estimate is still valid for all remaining work
- Only sunk costs are excluded from the estimate
- The schedule variance will have no impact on remaining costs
Correct answer: Future work will proceed at the efficiency implied by the EAC forecast
ETC = EAC - AC derives remaining effort directly from the forecasted final cost, inheriting whatever assumptions went into the EAC.
Question 7: Which of the following is NOT a component of the Earned Value Management baseline?
- Scope baseline
- Cost baseline
- Schedule baseline
- Quality baseline (Correct answer)
Correct answer: Quality baseline
EVM relies on the integrated scope, cost, and schedule baselines (the 'triple constraint' baselines); quality has a separate management plan but is not an EVM baseline component.
PMBOK Earned Value Management (EVM) 3
A project has EAC of $620,000 and BAC of $580,000.
What does this indicate?