EVM Certification Forecasting & Estimates at Completion — Questions and Answers

Question 1: Which EAC formula assumes all remaining work will be completed at the current Cost Performance Index (CPI)?

EAC = AC + (BAC - EV)
EAC = BAC / CPI (Correct answer)
EAC = AC + ETC
EAC = BAC - VAC

Correct answer: EAC = BAC / CPI

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

Question 2: In EVM terminology, what does ETC (Estimate to Complete) represent?

Total money spent on the project to date
Total remaining budget from the original plan
Expected cost needed to complete all remaining project work (Correct answer)
Difference between BAC and planned value

Correct 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.

Question 3: What is the formula for Variance at Completion (VAC)?

VAC = EV - AC
VAC = BAC - EAC (Correct answer)
VAC = PV - EV
VAC = BAC - AC

Correct answer: VAC = BAC - EAC

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

Question 4: A project has BAC = $200,000, EV = $80,000, and AC = $100,000. What is the EAC using the CPI-based formula?

$180,000
$220,000
$250,000 (Correct answer)
$240,000

Correct answer: $250,000

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

Question 5: Which EAC formula is considered the most optimistic because it assumes future work is completed at the original planned rate?

EAC = BAC / CPI
EAC = AC + (BAC - EV) (Correct answer)
EAC = AC + (BAC - EV) / CPI
EAC = AC + (BAC - EV) / (CPI x SPI)

Correct 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.

Question 6: What does TCPI > 1.0 indicate about a project's future performance requirement?

The project is currently ahead of schedule
The project must perform more efficiently than current CPI to meet the cost target (Correct answer)
The project has already exceeded its total budget
Future work requires less effort than originally planned

Correct 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.

Question 7: What is the standard formula for calculating ETC from a known EAC?

ETC = BAC - EV
ETC = EAC - EV
ETC = EAC - AC (Correct answer)
ETC = BAC - AC

Correct answer: ETC = EAC - AC

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

Question 8: What is the TCPI formula when using the original BAC as the cost target?

TCPI = (BAC - EV) / (BAC - AC) (Correct answer)
TCPI = (BAC - AC) / (BAC - EV)
TCPI = (EAC - EV) / (EAC - AC)
TCPI = EV / BAC

Correct answer: TCPI = (BAC - EV) / (BAC - AC)

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

Question 9: What is the TCPI formula when using the contractor's current EAC as the cost target?

TCPI = (BAC - EV) / (BAC - AC)
TCPI = (BAC - EV) / (EAC - AC) (Correct answer)
TCPI = EV / AC
TCPI = (EAC - AC) / (BAC - EV)

Correct 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.

Question 10: An Independent Estimate at Completion (IEAC) is typically prepared by which party?

The project manager using internal performance data
The cost control team during monthly reporting
An external or government/customer organization (Correct answer)
The scheduling team during an IBR

Correct 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.

Question 11: If TCPI based on BAC = 1.25 while current CPI = 0.80, what does this gap indicate?

The project can still meet BAC with its current performance level
Completing within BAC is highly unlikely without a significant efficiency improvement (Correct answer)
The team needs only a slight adjustment to hit the budget target
The schedule will recover automatically as CPI improves

Correct 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.

Question 12: Which EAC formula is most appropriate when both cost and schedule variances are significant and both efficiencies must be considered?

EAC = BAC / CPI
EAC = AC + (BAC - EV)
EAC = AC + (BAC - EV) / CPI
EAC = AC + (BAC - EV) / (CPI x SPI) (Correct answer)

Correct 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.

Question 13: A project has BAC = $500,000 and EAC = $575,000. What is the VAC, and what does it mean?

+$75,000, meaning the project will finish under budget
-$75,000, meaning the project is forecasted to overrun by $75,000 (Correct answer)
$575,000, representing the revised total forecast
-$500,000, representing the total budget consumed

Correct 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.

Question 14: Under ANSI/EIA-748 standards, which statement about EAC is correct?

EAC must always equal BAC at project initiation
EAC is only updated at project completion
EAC represents the contractor's current best estimate of total cost, updated regularly (Correct answer)
EAC cannot exceed BAC without formal customer approval

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.

Question 15: A project has CPI = 0.75 and BAC = $400,000. Using EAC = BAC / CPI, what is the EAC?

$480,000
$510,000
$533,333 (Correct answer)
$400,000

Correct 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.

Question 16: At project completion (100% done), Earned Value (EV) should equal which value?

Actual Cost (AC)
Planned Value (PV) at the original schedule end date
Budget at Completion (BAC) (Correct answer)
Estimate at Completion (EAC)

Correct answer: Budget at Completion (BAC)

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

Question 17: When is a bottom-up re-estimate of ETC most justified in EVM practice?

When the project CPI has been stable for several reporting periods
When the original estimate was fundamentally flawed or scope has changed significantly (Correct answer)
When CPI and SPI are both close to 1.0
When TCPI falls below 0.90

Correct 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.

Question 18: In a formal re-baseline scenario, what primarily changes in the EVM system?

Only the EAC is updated; BAC remains fixed
The Performance Measurement Baseline (PMB) is revised with a new time-phased budget (Correct answer)
Only the project schedule is revised, not the cost baseline
The TCPI resets to 1.0 automatically

Correct 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.

Question 19: Why is cumulative CPI considered a more reliable predictor for EAC than periodic (single-month) CPI?

Cumulative CPI uses only the most recent actual costs
Cumulative CPI averages out short-term fluctuations over the entire project history (Correct answer)
Cumulative CPI is always a higher value than periodic CPI
Cumulative CPI removes schedule impacts from cost data

Correct 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.

Question 20: According to EVM research (e.g., Christensen), at approximately what percentage of project completion does cumulative CPI become highly stable for EAC prediction?

10-15% complete
20-30% complete (Correct answer)
50-60% complete
75-80% complete

Correct 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.

Question 21: A project manager wants to forecast EAC accounting for a known scope increase but trusts the original cost estimating efficiency going forward. Which approach is most appropriate?

EAC = BAC / CPI using the original BAC
EAC = AC + New bottom-up ETC for remaining scope (Correct answer)
EAC = BAC + scope change cost / CPI
EAC = AC + (BAC - EV) assuming no efficiency loss

Correct answer: EAC = AC + New bottom-up ETC for remaining scope

When scope has materially changed, a bottom-up re-estimate of ETC for the revised remaining scope, added to AC, produces the most accurate and defensible EAC.

EVM Certification Forecasting & Estimates at Completion

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

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