Project Planning and Monitoring Project Planning and Monitoring Budget & Financial Management 2

Question 1

What does the Schedule Performance Index (SPI) measure in earned value analysis?

Accepted Answer

The efficiency of schedule progress — how much schedule value is earned per unit of planned schedule

Answer

SPI (EV ÷ PV) measures schedule efficiency; a value below 1.0 means less work was accomplished than planned, indicating schedule delays.

Question 2

What is the Estimate at Completion (EAC) formula when the future work is expected to be performed at the budgeted rate?

Accepted Answer

EAC = AC + (BAC – EV)

Answer

When remaining work is re-estimated at the original planned rate, EAC equals actual costs so far plus the remaining budget (BAC minus EV already earned).

Question 3

What is cost variance (CV) in earned value management?

Accepted Answer

The difference between earned value and actual costs, showing whether the project is over or under budget

Answer

CV = EV – AC; a positive CV means the project is under budget, while a negative CV indicates the project is over budget.

Question 4

What is the primary purpose of a project cost forecast?

Accepted Answer

To predict the final cost of the project based on current performance trends

Answer

A cost forecast uses current performance data and remaining work estimates to project what the project will cost at completion.

Question 5

What is 'funding limit reconciliation' in project cost management?

Accepted Answer

Adjusting the schedule of work to match the timing of available project funding

Answer

Funding limit reconciliation adjusts the schedule so that spending aligns with when authorized funds are actually available, preventing cash flow problems.

Project Planning and Monitoring Practice Test

Project Planning and Monitoring Practice Test

Project Planning and Monitoring Project Planning and Monitoring Budget & Financial Management 2