Financial Management for Project Managers Earned Value Management

Question 1

In Earned Value Management (EVM), the Budget at Completion (BAC) represents:

Accepted Answer

The total authorized budget for the entire project

Answer

BAC is the total planned budget authorized for the project, established during planning and used as the baseline denominator in many EVM calculations.

Question 2

Earned Value (EV) in EVM is defined as:

Accepted Answer

The budgeted cost of work that has been completed

Answer

EV (also called BCWP — Budgeted Cost of Work Performed) measures the value of work actually completed, expressed in terms of the approved budget for that work.

Question 3

Cost Variance (CV) in EVM is calculated as:

Accepted Answer

EV - AC

Answer

Cost Variance = EV - AC; a positive CV means the project is under budget, and a negative CV means it is over budget.

Question 4

Schedule Variance (SV) in EVM is calculated as:

Accepted Answer

EV - PV

Answer

Schedule Variance = EV - PV; a positive SV means the project is ahead of schedule, and a negative SV means it is behind schedule.

Question 5

A Cost Performance Index (CPI) of 0.85 means:

Accepted Answer

For every dollar spent, only $0.85 of planned value is earned — the project is over budget

Answer

A CPI less than 1.0 indicates cost overrun — the project is getting only $0.85 of earned value for every $1.00 actually spent.

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Earned Value Management