Project Management Earned Value Management (EVM) 2 — Questions and Answers
Question 1: A project has a BAC of $200,000, EV of $80,000, and AC of $100,000. What is the Cost Performance Index (CPI)?
- 0.80 (Correct answer)
- 1.25
- 0.75
- 1.00
Correct answer: 0.80
CPI = EV / AC = $80,000 / $100,000 = 0.80, meaning you are getting $0.80 of value for every $1 spent.
Question 2: Which EVM metric would a project manager use to predict the total cost at project completion if current cost performance continues?
- EAC = BAC / CPI (Correct answer)
- EAC = AC + BAC - EV
- EAC = AC + ETC
- EAC = EV + BAC
Correct answer: EAC = BAC / CPI
EAC = BAC / CPI is used when current cost performance is expected to continue for the remainder of the project.
Question 3: A project's SPI is 1.15. What does this indicate?
- The project is ahead of schedule (Correct answer)
- The project is behind schedule
- The project is over budget
- The project is under budget
Correct answer: The project is ahead of schedule
SPI > 1.0 means the project is ahead of schedule, earning more value than planned for the time elapsed.
Question 4: The Estimate to Complete (ETC) assumes remaining work will be done at the budgeted rate. Which formula represents this?
- ETC = BAC - EV (Correct answer)
- ETC = (BAC - EV) / CPI
- ETC = AC + BAC - EV
- ETC = BAC / CPI
Correct answer: ETC = BAC - EV
ETC = BAC - EV is used when past variances are atypical and future work is expected to proceed at the original budgeted rate.
Question 5: What does a negative Schedule Variance (SV) tell a project manager?
- The project has accomplished less work than planned (Correct answer)
- The project has spent more than budgeted
- The project will finish early
- The project scope has increased
Correct answer: The project has accomplished less work than planned
SV = EV - PV; a negative SV means EV < PV, so less work has been accomplished than was planned for this point in time.
Question 6: A project manager calculates a To-Complete Performance Index (TCPI) of 1.25. What does this mean?
- The remaining work must be done at $1.25 value per $1 spent to meet the BAC (Correct answer)
- The project has 25% budget remaining
- The project is 25% complete
- The CPI must remain at 1.25 to finish on time
Correct answer: The remaining work must be done at $1.25 value per $1 spent to meet the BAC
TCPI = (BAC - EV) / (BAC - AC); a value of 1.25 means each remaining dollar must produce $1.25 of earned value, which is very challenging.
Question 7: In EVM, what does the term 'Planned Value' represent?
- The authorized budget for scheduled work up to the status date (Correct answer)
- The value of work actually completed
- The total project budget
- The cost of work actually performed
Correct answer: The authorized budget for scheduled work up to the status date
Planned Value (PV) is the authorized budget assigned to the work scheduled to be accomplished by a specific date.
Project Management Earned Value Management (EVM) 2
A project has a BAC of $200,000, EV of $80,000, and AC of $100,000.
What is the Cost Performance Index (CPI)?