CAM Earned Value Management 1 — Questions and Answers
Question 1: What is the primary purpose of Earned Value Management (EVM) in project management?
- To track project risks
- To measure project performance and forecast trends (Correct answer)
- To manage only project costs
- To create new project deliverables
Correct answer: To measure project performance and forecast trends
Earned Value Management (EVM) is a project management methodology that integrates project scope, schedule, and cost data. Its primary purpose is to objectively measure project performance against planned baselines. By tracking progress and expenditures, EVM helps forecast future trends and completion outcomes, enabling proactive decision-making and control.
Question 2: Which metric measures the value of work performed in EVM?
- Planned Value (PV)
- Earned Value (EV) (Correct answer)
- Actual Cost (AC)
- Cost Variance (CV)
Correct answer: Earned Value (EV)
Earned Value (EV) is a key metric in EVM that quantifies the value of the work actually performed and completed to date. It represents the budgeted cost of the work performed, indicating how much budget should have been spent for the work accomplished. EV is crucial for assessing the true progress of a project against its plan.
Question 3: How is Cost Variance (CV) calculated in Earned Value Management?
- CV = PV - EV
- CV = EV - AC (Correct answer)
- CV = AC - EV
- CV = EV / AC
Correct answer: CV = EV - AC
Cost Variance (CV) is calculated by subtracting the Actual Cost (AC) from the Earned Value (EV). This metric indicates whether the project is over or under budget for the work completed. A positive CV means the project is under budget, while a negative CV signifies it is over budget, providing insight into cost performance.
Question 4: What does a Schedule Performance Index (SPI) value less than 1 indicate?
- Project is ahead of schedule
- Project is on schedule
- Project is behind schedule (Correct answer)
- Project has no schedule variance
Correct answer: Project is behind schedule
The Schedule Performance Index (SPI) is calculated as Earned Value (EV) divided by Planned Value (PV). An SPI value less than 1 indicates that the project is progressing slower than planned, meaning less work has been completed than scheduled. Therefore, a value less than 1 signifies that the project is behind schedule.
Question 5: Which EVM metric provides insight into project cost efficiency?
- Schedule Performance Index (SPI)
- Cost Performance Index (CPI) (Correct answer)
- Estimate at Completion (EAC)
- Planned Value (PV)
Correct answer: Cost Performance Index (CPI)
The Cost Performance Index (CPI) is an EVM metric that measures the cost efficiency of a project, calculated by dividing Earned Value (EV) by Actual Cost (AC). A CPI greater than 1 indicates that the project is under budget for the work performed, showing good cost efficiency. Conversely, a CPI less than 1 suggests cost overruns.
Question 6: What is the Estimate at Completion (EAC) used for in EVM?
- To calculate project profit
- To forecast the total project cost (Correct answer)
- To determine stakeholder satisfaction
- To assess team performance
Correct answer: To forecast the total project cost
The Estimate at Completion (EAC) is a forecast of the total cost that will be incurred to complete all project work. It uses current project performance data, including actual costs and earned value, to project the final financial outcome. EAC helps stakeholders understand the likely final cost and aids in financial planning.
CAM Earned Value Management 1
What is the primary purpose of Earned Value Management (EVM) in project management?