PCC Performance Measurement & KPIs 2 — Questions and Answers
Question 1: A project has a Budget at Completion (BAC) of $500,000, an Earned Value (EV) of $200,000, and an Actual Cost (AC) of $250,000. What is the Cost Performance Index (CPI)?
- 0.80 (Correct answer)
- 1.25
- 0.75
- 1.00
Correct answer: 0.80
CPI = EV / AC = $200,000 / $250,000 = 0.80, indicating the project is over budget.
Question 2: Which KPI measures the ratio of value earned to the value scheduled to be earned at a given point in time?
- Cost Performance Index (CPI)
- Schedule Performance Index (SPI) (Correct answer)
- Estimate at Completion (EAC)
- To-Complete Performance Index (TCPI)
Correct answer: Schedule Performance Index (SPI)
SPI = EV / PV and measures how efficiently the project is progressing against the planned schedule.
Question 3: A project's To-Complete Performance Index (TCPI) based on BAC is 1.15. What does this indicate?
- The project must perform 15% more efficiently than planned to finish on budget (Correct answer)
- The project is 15% under budget
- The project will complete 15% ahead of schedule
- The project needs 15% less effort than originally estimated
Correct answer: The project must perform 15% more efficiently than planned to finish on budget
TCPI > 1.0 means the remaining work must be completed more efficiently than originally planned to meet the BAC.
Question 4: In Earned Value Management, what does a negative Schedule Variance (SV) indicate?
- The project is under budget
- The project is ahead of schedule
- The project is behind schedule (Correct answer)
- The project has exceeded its scope
Correct answer: The project is behind schedule
SV = EV - PV; a negative result means less value has been earned than was planned, indicating a schedule delay.
Question 5: Which metric represents the authorized budget assigned to the work scheduled to be accomplished in a given time period?
- Earned Value (EV)
- Actual Cost (AC)
- Planned Value (PV) (Correct answer)
- Budget at Completion (BAC)
Correct answer: Planned Value (PV)
Planned Value (PV), also called Budgeted Cost of Work Scheduled (BCWS), is the authorized budget for work planned by a specific date.
Question 6: A project manager calculates EAC using the formula EAC = AC + (BAC - EV). Which assumption does this method make?
- Future work will be performed at the current CPI
- Future work will be performed at the planned rate
- All cost variances are atypical and will not recur (Correct answer)
- The project must be rebaselined
Correct answer: All cost variances are atypical and will not recur
EAC = AC + (BAC - EV) assumes that past cost variances are atypical and remaining work will be completed at the original budget rate.
Question 7: Which of the following is the BEST indicator that a project's performance measurement baseline (PMB) needs to be formally rebaselined?
- CPI drops below 0.95 for two consecutive reporting periods
- The project sponsor requests a status update
- A cumulative CPI below 0.80 persists and the project scope has been formally changed (Correct answer)
- SPI exceeds 1.10 for three months
Correct answer: A cumulative CPI below 0.80 persists and the project scope has been formally changed
A persistently low CPI combined with an approved scope change are the strongest indicators that the PMB no longer reflects achievable performance.
PCC Performance Measurement & KPIs 2
A project has a Budget at Completion (BAC) of $500,000, an Earned Value (EV) of $200,000, and an Actual Cost (AC) of $250,000.
What is the Cost Performance Index (CPI)?