Forecasting & Estimates at Completion Flashcards

Which EAC formula assumes all remaining work will be completed at the current Cost Performance Index (CPI)?

Answer: EAC = BAC / CPI

EAC = BAC / CPI assumes the current cost efficiency will persist for all remaining work on the project.

In EVM terminology, what does ETC (Estimate to Complete) represent?

Answer: Expected cost needed to complete all remaining project work

ETC is the expected future cost to finish all remaining project work from the current status point forward.

What is the formula for Variance at Completion (VAC)?

Answer: VAC = BAC - EAC

VAC = BAC - EAC; a negative result means the project is forecasted to finish over budget.

A project has BAC = $200,000, EV = $80,000, and AC = $100,000. What is the EAC using the CPI-based formula?

Answer: $250,000

CPI = EV/AC = 80,000/100,000 = 0.80; EAC = BAC/CPI = 200,000/0.80 = $250,000.

Which EAC formula is considered the most optimistic because it assumes future work is completed at the original planned rate?

Answer: EAC = AC + (BAC - EV)

EAC = AC + (BAC - EV) adds actual costs to remaining budget at face value, assuming no further efficiency loss — the most optimistic recovery assumption.

What does TCPI > 1.0 indicate about a project's future performance requirement?

Answer: The project must perform more efficiently than current CPI to meet the cost target

TCPI > 1.0 means the team must achieve higher cost efficiency on remaining work than demonstrated to date to reach the target.

What is the standard formula for calculating ETC from a known EAC?

Answer: ETC = EAC - AC

ETC = EAC - AC; subtracting costs already incurred (AC) from the total forecast (EAC) gives the remaining cost to finish.

What is the TCPI formula when using the original BAC as the cost target?

Answer: TCPI = (BAC - EV) / (BAC - AC)

TCPI (BAC) = (BAC - EV) / (BAC - AC): work remaining divided by funds remaining against the original budget.

What is the TCPI formula when using the contractor's current EAC as the cost target?

Answer: TCPI = (BAC - EV) / (EAC - AC)

TCPI (EAC) = (BAC - EV) / (EAC - AC): replaces BAC with EAC in the denominator to measure efficiency needed against the revised estimate.

An Independent Estimate at Completion (IEAC) is typically prepared by which party?

Answer: An external or government/customer organization

IEAC is prepared by an independent party — typically the customer or government — to validate or challenge the contractor's EAC from an outside perspective.

If TCPI based on BAC = 1.25 while current CPI = 0.80, what does this gap indicate?

Answer: Completing within BAC is highly unlikely without a significant efficiency improvement

The team would need to perform roughly 56% more efficiently than the current CPI to reach BAC, making recovery within original budget highly unrealistic.

Which EAC formula is most appropriate when both cost and schedule variances are significant and both efficiencies must be considered?

Answer: EAC = AC + (BAC - EV) / (CPI x SPI)

The composite CPI × SPI formula accounts for both cost and schedule inefficiencies, providing a more realistic forecast when both indices are significantly below 1.0.

A project has BAC = $500,000 and EAC = $575,000. What is the VAC, and what does it mean?

Answer: -$75,000, meaning the project is forecasted to overrun by $75,000

VAC = BAC - EAC = $500,000 - $575,000 = -$75,000; the negative value signals a projected cost overrun of $75,000 at completion.

Under ANSI/EIA-748 standards, which statement about EAC is correct?

Answer: EAC represents the contractor's current best estimate of total cost, updated regularly

Under ANSI/EIA-748, EAC is the contractor's current best estimate of total program cost, updated throughout the project to reflect actual performance and re-estimates.

A project has CPI = 0.75 and BAC = $400,000. Using EAC = BAC / CPI, what is the EAC?

Answer: $533,333

EAC = BAC / CPI = $400,000 / 0.75 = $533,333, reflecting that every budgeted dollar is only generating $0.75 of earned value.

At project completion (100% done), Earned Value (EV) should equal which value?

Answer: Budget at Completion (BAC)

At 100% completion, all budgeted work has been accomplished, so EV = BAC by definition.

When is a bottom-up re-estimate of ETC most justified in EVM practice?

Answer: When the original estimate was fundamentally flawed or scope has changed significantly

A bottom-up re-estimate is appropriate when the original plan is no longer a valid basis for forecasting due to major scope changes or fundamentally flawed assumptions.

In a formal re-baseline scenario, what primarily changes in the EVM system?

Answer: The Performance Measurement Baseline (PMB) is revised with a new time-phased budget

Re-baselining revises the PMB — the time-phased budget — and typically includes a new BAC, requiring formal change control approval.

Why is cumulative CPI considered a more reliable predictor for EAC than periodic (single-month) CPI?

Answer: Cumulative CPI averages out short-term fluctuations over the entire project history

Cumulative CPI incorporates all performance data to date, smoothing out one-time events and making it a more stable and reliable basis for EAC forecasting.

According to EVM research (e.g., Christensen), at approximately what percentage of project completion does cumulative CPI become highly stable for EAC prediction?

Answer: 20-30% complete

Research shows cumulative CPI stabilizes within roughly ±10% once a project reaches 20-30% completion, enabling reliable EAC forecasts relatively early.