Question from Cost Management

Submitted by Irfan123 on Thu, 03/21/2013 - 00:28

 Hi friends,

 

Can someone help me with this question with the evidence?

The cumulative planned value for the project is $35,000 with a total budget of $100,000.  The project is 30% complete and 40% spent.  A new bottoms-up estimate of $120,000 has just been completed. What is the ETC for the project ?

 

A.$120,000
B.$80,000
C.$85,000
D.$90,000.
 

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bpatel

Thu, 03/21/2013 - 00:56

ETC = BAC - EV


120000 - 30000


= 90000


 


Answer is D

pmplearner1977

Thu, 03/21/2013 - 01:44

  EV- AC shows negative (30000 - 40000) variance. that shows Budget is not appropriate at this time.

Dont we need to calculate this by EAC - AC ?

I am freaking confused on the formulas and their variances between each source ?

 

pmpnewster

Thu, 03/21/2013 - 12:54

I hear you bud... Typos in some cases or careless errors in other cases... you name it... it's all there. Gotta be careful about what we believe in... lest it ends up being a wrong formula. When in doubt, best to ask on the forum and wait for multiple responses. Take it easy!

 

 

sspawar

Thu, 03/21/2013 - 01:59

 ETC = EAC - AC 

= 120000-40000 = 80000

aramir

Thu, 03/21/2013 - 14:14

Narinder is right, see explanation below :- )

narinder

Thu, 03/21/2013 - 05:12

In question "A new bottoms-up estimate of $120,000 has just been completed" is basically EAC ($1,20,000) as BAC ($1,00,000) is no longer viable

Logically, it can not be ETC. if we consider it as ETC then the total budget will shoot up to ($1,20,000+$40,000=$1,60,000) i.e 60% more than the original budget.

But the variance is only $10,000 ($30,000-$40,000) and for the remaining 70% work, the budget can not be that much high.

as per above $1,20,000 is EAC  = AC + Bottom-up ETC

and ETC = EAC - AC = $1,20,000 - $40,000 = $80,000

so the answer is B. 

This is my view. Guru's, please correct me if i'm wrong

Regards

Narinder