Project Management Earned Value Management (EVM) 3 — Questions and Answers
Question 1: A project has BAC = $500,000, CPI = 0.90, and is 60% complete by EV. A new EAC is needed assuming past performance continues. What is the EAC?
- $555,556 (Correct answer)
- $500,000
- $450,000
- $480,000
Correct answer: $555,556
EAC = BAC / CPI = $500,000 / 0.90 ≈ $555,556, reflecting that inefficiency will persist through project completion.
Question 2: Which of the following best describes the Variance at Completion (VAC)?
- The projected difference between BAC and EAC (Correct answer)
- The difference between EV and AC at the reporting date
- The difference between PV and EV at the reporting date
- The remaining budget to complete the project
Correct answer: The projected difference between BAC and EAC
VAC = BAC - EAC; it predicts whether the project will be over or under budget at the end.
Question 3: A project manager observes CPI = 0.75 and SPI = 0.85. What is the most accurate conclusion?
- The project is both over budget and behind schedule (Correct answer)
- The project is under budget and ahead of schedule
- The project is over budget but ahead of schedule
- The project is under budget but behind schedule
Correct answer: The project is both over budget and behind schedule
CPI < 1 means over budget and SPI < 1 means behind schedule, so both performance dimensions are unfavorable.
Question 4: What is the primary purpose of the Performance Measurement Baseline (PMB) in EVM?
- To provide the integrated scope, schedule, and cost baseline against which project performance is measured (Correct answer)
- To record actual costs incurred on the project
- To define the earned value calculation method
- To document changes to the project scope
Correct answer: To provide the integrated scope, schedule, and cost baseline against which project performance is measured
The PMB integrates scope, schedule, and cost and serves as the reference point for measuring project performance variances.
Question 5: A work package has a BAC of $10,000, is 50% complete by EV, and has spent $6,000. What is the Cost Variance (CV)?
- -$1,000 (Correct answer)
- +$1,000
- -$4,000
- +$4,000
Correct answer: -$1,000
EV = 50% × $10,000 = $5,000; CV = EV - AC = $5,000 - $6,000 = -$1,000, indicating a cost overrun.
Question 6: Which EVM technique assigns 100% credit only when the work package is fully completed?
- 0/100 method (Correct answer)
- 50/50 method
- Percent complete
- Milestone method
Correct answer: 0/100 method
The 0/100 method assigns no earned value until the work is complete, then grants 100% — ideal for short-duration tasks.
Question 7: During a project review, the EAC is recalculated using EAC = AC + (BAC - EV). When is this formula most appropriate?
- When the remaining work will be performed at the original budgeted rate despite past overruns (Correct answer)
- When current cost performance is expected to continue unchanged
- When both CPI and SPI must be factored into future estimates
- When the project scope has changed significantly
Correct answer: When the remaining work will be performed at the original budgeted rate despite past overruns
This formula assumes the cost overrun to date was a one-time event and future work will proceed as originally planned.
Project Management Earned Value Management (EVM) 3
A project has BAC = $500,000, CPI = 0.90, and is 60% complete by EV.
A new EAC is needed assuming past performance continues.
What is the EAC?