ACAP Earned Value Management 2 — Questions and Answers
Question 1: What does a negative Schedule Variance (SV = EV - PV) indicate on a program?
- The program is under budget
- The program is ahead of schedule
- The program is behind schedule (Correct answer)
- The program has exceeded its management reserve
Correct answer: The program is behind schedule
A negative SV (EV < PV) means less work has been earned than was planned, indicating the program is behind schedule.
Question 2: What does the Budget at Completion (BAC) represent in an EVM framework?
- The actual cost incurred to complete all authorized work
- The total authorized budget for the entire program scope (Correct answer)
- The projected final cost based on current cost performance
- The remaining funds available after management reserve drawdown
Correct answer: The total authorized budget for the entire program scope
BAC is the total authorized budget for all work in the program — the sum of all budgets allocated in the PMB plus management reserve.
Question 3: Which Estimate at Completion (EAC) formula assumes current cost efficiency will continue for the remainder of the program?
- EAC = AC + ETC
- EAC = BAC - EV + AC
- EAC = BAC / CPI (Correct answer)
- EAC = AC + (BAC - EV)
Correct answer: EAC = BAC / CPI
EAC = BAC / CPI projects final cost assuming the cumulative CPI experienced to date will persist throughout the remaining work.
Question 4: What is the purpose of the To-Complete Performance Index (TCPI)?
- To calculate the contractor's award fee percentage
- To determine the cost efficiency required to complete remaining work within a specified budget goal (Correct answer)
- To measure technical performance against contract specifications
- To calculate schedule float on the critical path
Correct answer: To determine the cost efficiency required to complete remaining work within a specified budget goal
TCPI = (BAC - EV) / (BAC - AC) or (EAC - AC); it shows the future cost efficiency needed to meet the BAC or EAC goal.
Question 5: In EVM, what is Management Reserve (MR)?
- Funds allocated to the PMB for known schedule risks
- Budget withheld from the PMB and held for unplanned but in-scope work (Correct answer)
- The difference between the contract ceiling price and the BAC
- Contingency funds earmarked for out-of-scope contract modifications
Correct answer: Budget withheld from the PMB and held for unplanned but in-scope work
Management Reserve is budget held outside the PMB by program management for unknown, unplanned — but in-scope — risks.
Question 6: What does the Variance at Completion (VAC) formula calculate?
- VAC = EAC - BAC
- VAC = BAC - EAC (Correct answer)
- VAC = EV - AC
- VAC = PV - EV
Correct answer: VAC = BAC - EAC
VAC = BAC - EAC; a negative VAC signals a projected cost overrun at program completion.
Question 7: What is the Estimate to Complete (ETC) in EVM, and how does it relate to EAC?
- ETC is the cost incurred to date; EAC = ETC + BAC
- ETC is the expected cost to finish remaining work; EAC = AC + ETC (Correct answer)
- ETC is the budgeted cost of remaining work; EAC = ETC - AC
- ETC is the management reserve balance; EAC = BAC - ETC
Correct answer: ETC is the expected cost to finish remaining work; EAC = AC + ETC
ETC is the expected cost to complete all remaining work; adding actual costs to date (AC) yields the Estimate at Completion (EAC).
ACAP Earned Value Management 2
What does a negative Schedule Variance (SV = EV - PV) indicate on a program?