PMBOK Earned Value Management (EVM) Questions and Answers — Questions and Answers
Question 1: A project has a Planned Value (PV) of $100,000, an Earned Value (EV) of $90,000, and an Actual Cost (AC) of $110,000. What is the Cost Performance Index (CPI), and what does it indicate?
- 0.82, indicating the project is over budget. (Correct answer)
- 1.22, indicating the project is under budget.
- 0.90, indicating the project is behind schedule.
- 1.10, indicating the project is ahead of schedule.
Correct answer: 0.82, indicating the project is over budget.
The Cost Performance Index (CPI) is calculated as Earned Value (EV) divided by Actual Cost (AC). In this case, CPI = $90,000 / $110,000 = 0.818, or approximately 0.82. Since the CPI is less than 1.0, it signifies that for every dollar spent, the project is only earning $0.82 of planned value, indicating the project is over budget.
Question 2: A project status report indicates a Schedule Performance Index (SPI) of 1.2 and a Cost Performance Index (CPI) of 0.8. How should the project manager interpret these results?
- The project is behind schedule and under budget.
- The project is behind schedule and over budget.
- The project is ahead of schedule and under budget.
- The project is ahead of schedule and over budget. (Correct answer)
Correct answer: The project is ahead of schedule and over budget.
An SPI greater than 1.0 (1.2 in this case) indicates that more work has been completed than was planned, so the project is ahead of schedule. A CPI less than 1.0 (0.8 in this case) indicates that the project is costing more than planned for the work completed, meaning it is over budget. Therefore, the project is ahead of schedule and over budget.
Question 3: A project manager determines that the original budget is no longer viable due to unforeseen circumstances and that future work will be performed at the budgeted rate. Which formula should be used to calculate the Estimate at Completion (EAC)?
- EAC = BAC / CPI
- EAC = AC + (BAC - EV) (Correct answer)
- EAC = AC + Bottom-up ETC
- EAC = AC + (BAC - EV) / (CPI * SPI)
Correct answer: EAC = AC + (BAC - EV)
When past performance is considered atypical and the project manager expects future work to be accomplished at the planned, budgeted rate, the Estimate at Completion (EAC) is calculated by adding the Actual Cost (AC) to date to the remaining budget. The remaining budget is the Budget at Completion (BAC) minus the Earned Value (EV). The formula is EAC = AC + (BAC - EV).
Question 4: In Earned Value Management, which of the following best describes Schedule Variance (SV)?
- A ratio of earned value to planned value.
- The difference between the actual cost and the earned value.
- The measure of the cost efficiency of budgeted resources.
- The difference between the earned value and the planned value. (Correct answer)
Correct answer: The difference between the earned value and the planned value.
Schedule Variance (SV) is a measure of schedule performance on a project. It is calculated using the formula SV = EV - PV (Earned Value minus Planned Value). A positive SV indicates the project is ahead of schedule, while a negative SV indicates it is behind schedule.
Question 5: A project is currently over budget. The project manager needs to determine the cost performance required for the remainder of the project to achieve the original Budget at Completion (BAC). Which metric should be calculated?
- Cost Performance Index (CPI)
- Variance at Completion (VAC)
- To-Complete Performance Index (TCPI) (Correct answer)
- Estimate to Complete (ETC)
Correct answer: To-Complete Performance Index (TCPI)
The To-Complete Performance Index (TCPI) is the calculated cost performance index that must be achieved on the remaining work to meet a specified management goal, such as the original Budget at Completion (BAC). The formula based on the BAC is TCPI = (BAC - EV) / (BAC - AC). It answers the question, 'How efficiently must we use our remaining resources to meet the original budget?'
Question 6: To perform Earned Value Analysis, which of the following three data points are required as the fundamental inputs?
- Planned Value (PV), Actual Cost (AC), and Schedule Variance (SV)
- Earned Value (EV), Cost Variance (CV), and Budget at Completion (BAC)
- Planned Value (PV), Earned Value (EV), and Actual Cost (AC) (Correct answer)
- Actual Cost (AC), Estimate at Completion (EAC), and Variance at Completion (VAC)
Correct answer: Planned Value (PV), Earned Value (EV), and Actual Cost (AC)
The three fundamental data points required for Earned Value Management are Planned Value (PV), which is the authorized budget assigned to scheduled work; Earned Value (EV), which is the measure of work performed expressed in terms of the budget authorized for that work; and Actual Cost (AC), which is the realized cost incurred for the work performed. All other variances and indices (like SV, CV, SPI, CPI) are calculated from these three core metrics.
PMBOK Earned Value Management (EVM) Questions and Answers
A project has a Planned Value (PV) of $100,000, an Earned Value (EV) of $90,000, and an Actual Cost (AC) of $110,000.
What is the Cost Performance Index (CPI), and what does it indicate?