Question to EVM

Submitted by daso on Tue, 02/05/2013 - 18:07

Your project exceeded costs in the past caused by an underestimation of resource costs in the cost baseline:

PV: $1,200,000, EV: $1,000,000, AC: $1,200,000

You expect the underestimation to influence the future as much as it did in the past. If the value of the remaining work (BAC – EV) is at $1,000,000, what should be your new EAC (estimate at completion)?

A) $1,800,000

B) $2,000,000

C) $2,200,000

D) $2,400,000

 

I know that I have to use the formular EAC with CPI and SPI, but I do not get a result depicted above.

Can someone please clearify?

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sunitaPMP

Tue, 02/05/2013 - 19:35

Is option c) is the ans? 2200,000?

 

EAC=AC+ETC=AC+BAC-EV=1200,000+1000,000=2200,000

raza82

Tue, 02/05/2013 - 19:44

 CPI = EV/AC = 0.83

BAC - EV = 1000000

therefore BAC = 1000000 + EV = 2000000

now. EAC = BAC/CPI = 2000000/0.83 = 2409638.55

 

sspawar

Wed, 02/06/2013 - 04:17

You expect the underestimation to influence the future as much as it did in the past.. its an example of typical case.

hence

u can apply BAC/ CPI = 240----- D

sunitaPMP

Wed, 02/06/2013 - 17:51

hi daso,

what is teh correct ans for this?

 

daso

Wed, 02/06/2013 - 19:29

correct answer according to lehmann's 175 questions on PMP is D

but it says "with use of CPI and SPI"... this is a little confusing

sspawar

Fri, 02/22/2013 - 06:04

In question no time limit condition is given means SPI is immaterial.

 

sgadewar

Fri, 02/22/2013 - 13:38

It is said that BAC is at the toss becuase of underestimations which means BAC-EV is not going to give you true result. What really needed is something like EAC which could be calculated using the CPI formula. 

BAC-EV could have been usefull provided, you do not expect similar variances in the future but in question it says that you expect underestimation to influence the future which is your future values are going to get skewed, which also means your future ETC work cannot be accompolished at the budjeted rate.

The best way is caluclate EAC by using the CPI forumla of EV and AC and then derive the results. becuase this is the only method which assumes that expected what project has expected to date can be continued in future.

Intially I also thought answer C is correct however after rereading the question i got the correct picture. Remember in exam there will be exactly similar kind of questions, please read the question twice before attempting it in exam and also try to understand what is the scenario provided.