PMI Earned Value Management 3 — Questions and Answers
Question 1: A project manager is using a cumulative CPI of 0.75 and the project has $400,000 remaining in BAC. Which EAC formula is most appropriate when assuming current inefficiencies will continue?
- EAC = AC + (BAC - EV)
- EAC = BAC / CPI (Correct answer)
- EAC = AC + ETC (new estimate)
- EAC = AC + (BAC - EV) / (CPI × SPI)
Correct answer: EAC = BAC / CPI
EAC = BAC / CPI is used when the current cost performance rate is expected to continue for the rest of the project.
Question 2: Which EVM term represents the authorized budget assigned to scheduled work?
- Actual Cost (AC)
- Earned Value (EV)
- Planned Value (PV) (Correct answer)
- Budget at Completion (BAC)
Correct answer: Planned Value (PV)
Planned Value (PV) is the authorized budget allocated to the work that was scheduled to be accomplished by a specific point in time.
Question 3: A project shows SPI = 1.10 and CPI = 0.90. How should this situation be interpreted?
- Ahead of schedule but over budget (Correct answer)
- Behind schedule and over budget
- Ahead of schedule and under budget
- Behind schedule but under budget
Correct answer: Ahead of schedule but over budget
SPI > 1.0 means ahead of schedule; CPI < 1.0 means over budget — so the project is doing more work than planned but spending too much to do it.
Question 4: In EVM, what does the term 'Budgeted Cost of Work Performed' (BCWP) correspond to in modern PMI terminology?
- Planned Value (PV)
- Actual Cost (AC)
- Earned Value (EV) (Correct answer)
- Budget at Completion (BAC)
Correct answer: Earned Value (EV)
BCWP is the older term for Earned Value (EV) — the authorized budget for the work actually accomplished.
Question 5: A work package has a BAC of $10,000 and is 40% complete. Using the percent complete method, what is the Earned Value?
- $4,000 (Correct answer)
- $6,000
- $10,000
- $2,500
Correct answer: $4,000
EV = % Complete × BAC = 0.40 × $10,000 = $4,000.
Question 6: Which performance measurement baseline (PMB) component is NOT part of the EVM data analysis process?
- Scope baseline
- Schedule baseline
- Cost baseline
- Risk register (Correct answer)
Correct answer: Risk register
The performance measurement baseline integrates scope, schedule, and cost baselines; the risk register is a planning document, not a PMB component.
Question 7: When a project's cumulative CPI drops below 1.0 early in the project, research suggests what will likely happen to the final CPI?
- It will recover above 1.0 through corrective actions
- It will remain near the early cumulative CPI value through project completion (Correct answer)
- It will improve as the team gains experience
- It will drop further due to compounding inefficiencies
Correct answer: It will remain near the early cumulative CPI value through project completion
Research by Christensen shows that cumulative CPI rarely improves by more than 0.10 after the 20% project completion point.
PMI Earned Value Management 3
A project manager is using a cumulative CPI of 0.75 and the project has $400,000 remaining in BAC.
Which EAC formula is most appropriate when assuming current inefficiencies will continue?