CAPM Earned Value Management 3 — Questions and Answers
Question 1: A project manager calculates VAC = −$15,000. What does this Variance at Completion indicate?
- The project will finish $15,000 under budget
- The project will finish $15,000 over budget (Correct answer)
- The project is $15,000 ahead of schedule
- The project has $15,000 remaining in reserves
Correct answer: The project will finish $15,000 over budget
VAC = BAC − EAC; a negative VAC means the project is forecasted to exceed its budget.
Question 2: When calculating EAC under the assumption that the remaining work will be completed at the budgeted rate (ignoring current CPI), which formula is used?
- EAC = BAC / CPI
- EAC = AC + (BAC − EV) (Correct answer)
- EAC = AC + (BAC − EV) / (CPI × SPI)
- EAC = EV / AC
Correct answer: EAC = AC + (BAC − EV)
EAC = AC + (BAC − EV) assumes the remaining work proceeds at the original planned rate regardless of past performance.
Question 3: A project reports CV = +$8,000. What does this Cost Variance indicate?
- The project has spent $8,000 more than planned
- The project has earned $8,000 more value than spent (Correct answer)
- The project is $8,000 ahead of schedule
- The project will overrun by $8,000
Correct answer: The project has earned $8,000 more value than spent
CV = EV − AC; a positive CV means the project has delivered more value than the money spent.
Question 4: Which EVM metric is used to evaluate the cost efficiency needed on remaining work to meet the original BAC?
- CPI
- SPI
- TCPI (Correct answer)
- VAC
Correct answer: TCPI
TCPI (To-Complete Performance Index) measures the cost efficiency required on remaining work to achieve a specific target (BAC or EAC).
Question 5: TCPI based on BAC is calculated as:
- (BAC − EV) / (BAC − AC) (Correct answer)
- (EV − AC) / BAC
- BAC / CPI
- (BAC − AC) / (BAC − EV)
Correct answer: (BAC − EV) / (BAC − AC)
TCPI = (BAC − EV) / (BAC − AC) — remaining work divided by remaining budget.
Question 6: A project has PV = $80,000, EV = $72,000, and AC = $78,000. What is the SPI?
- 0.90
- 0.92 (Correct answer)
- 1.08
- 1.11
Correct answer: 0.92
SPI = EV / PV = $72,000 / $80,000 = 0.90, indicating the project is progressing at 90% of the planned rate.
Question 7: In EVM, the term 'Work Package' refers to:
- A high-level project milestone
- The lowest level of the WBS where cost and schedule can be monitored (Correct answer)
- The total project budget allocation
- A risk register entry
Correct answer: The lowest level of the WBS where cost and schedule can be monitored
Work packages are the lowest WBS level where time and cost are estimated, tracked, and controlled in EVM.
CAPM Earned Value Management 3
A project manager calculates VAC = −$15,000.
What does this Variance at Completion indicate?