EVM Certification EVM Certification Cost Control & Budgeting 1 — Questions and Answers
Question 1: What does the Budget at Completion (BAC) represent in Earned Value Management?
- The total planned cost for the entire project (Correct answer)
- The actual cost spent so far
- The estimated cost to complete remaining work
- The variance between planned and actual costs
Correct answer: The total planned cost for the entire project
BAC is the total approved budget allocated for the entire project scope.
Question 2: Which formula is used to calculate the Estimate at Completion (EAC) when future work is expected to proceed at the planned rate?
- EAC = AC + (BAC - EV) (Correct answer)
- EAC = BAC / CPI
- EAC = AC + ETC
- EAC = BAC - CV
Correct answer: EAC = AC + (BAC - EV)
When future performance is expected at the planned rate, EAC = AC + (BAC – EV), meaning remaining work is done at budget.
Question 3: A project has a CPI of 0.85. What does this indicate about the project's cost performance?
- The project is over budget — getting only $0.85 of value per dollar spent (Correct answer)
- The project is under budget and performing efficiently
- The project is on budget with minor variance
- The project schedule is behind by 15%
Correct answer: The project is over budget — getting only $0.85 of value per dollar spent
A CPI below 1.0 means the project is over budget, delivering less value than the money spent.
Question 4: What is the Variance at Completion (VAC) formula?
- VAC = BAC - EAC (Correct answer)
- VAC = EV - AC
- VAC = BAC - AC
- VAC = EV - PV
Correct answer: VAC = BAC - EAC
VAC = BAC – EAC shows the projected difference between the original budget and the expected final cost.
Question 5: On an EVM project, the Cost Variance (CV) is calculated as:
- EV minus AC (Correct answer)
- PV minus AC
- BAC minus EV
- AC minus PV
Correct answer: EV minus AC
CV = EV – AC; a positive CV means the project is under budget, while a negative CV means over budget.
Question 6: What is the primary purpose of the To-Complete Performance Index (TCPI)?
- To determine the cost efficiency needed to meet a financial target for remaining work (Correct answer)
- To measure the ratio of earned value to planned value
- To forecast the total cost at project completion
- To calculate the schedule variance in cost terms
Correct answer: To determine the cost efficiency needed to meet a financial target for remaining work
TCPI shows the required cost efficiency ratio on all remaining work to meet the BAC or EAC target.
EVM Certification EVM Certification Cost Control & Budgeting 1
What does the Budget at Completion (BAC) represent in Earned Value Management?