BAC EAC question

Submitted by rleroux on Sat, 08/25/2012 - 02:38


Here is a sample question I am struggling with:

You are managing a construction project and you project budget is $20,000.  You have spent $17.000 so far and the project is 75% complete.  A new project budget of $25,000 has been approved.  What should you cost performance be if you want to complete your project within the new approved budget.

 

I’ll skip the math in the answer as the TCPI formula is well known.  My problem was I used $25,000 as the BAC.  I assumed the “new budget of $25,000” meant a budget variance had occurred and a change request for additional budget had been approved to provide the funds necessary ($25,000). 

 

So my question is, when a change request for additional budget is approved, doesn’t the old EAC ($25,000) become the new BAC, as we have set a new budget?      

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srikanthmech

Sun, 08/26/2012 - 12:46

 Hi, The idea here is $ 25,000 is the EAC. Even though you got a CR for the new project, you need to name the new final budget  as EAC. This is because in order to get the TCPI, you need to consider the BAC until the point the change was implemented, otherwise you are not considering the CPI for the current work. Hope this makes sense. 

Though the PMP questions may sound complex, the underlying calculation will be simple most of the time. So all you have to do when you start, is mark the values in paper as your read your question - BAC = 20,000, AC = 17,000, EAC = 25,000, EV = 75 % of BAC, etc.

Guys - please correct me if I am wrong.