You are halfway through your project and your sponsor would like to know how much the project is expected to cost when it is completed. What earned value metric should you use?
Answer: C. EAC
EAC (Estimate at Completion) tells you that the project is expected to cost x dollars. This is derived from how much you thought it would cost from the beginning (BAC) and what the rate of spending is (CPI).
As the project manager with a time conscience sponsor, you have been monitoring earned value throughout the year long project. At the halfway point, you report that the SPI is 0.8. This means that the project is:
A. Ahead of schedule
B. Under budget
C. Behind schedule
D. Over budget
Answer: C. Behind schedule
The Schedule Performance Index (SPI) determines how much ahead or behind schedule you are. An SPI of 1.0 means you are on target. Therefore, an SPI of 1.5 means that you are progressing at 150% of the baseline, which is a good thing. Conversely, an SPI of 0.8 represents only moving at 80% of the baseline, not so good. In short, over 1.0 is good, under 1.0 is bad.
At your upcoming status meeting with your project sponsor, rather than just using a table, you want to graphically show earned value. Which of the following charts will you use?
A. Trend analysis
B. Control chart
D. Pareto diagram
Answer: C. S-curve
An S-curve graph typically displays earned value (EV), planned value (PV) and actual cost (AC). PV is charted first and will look like an S. As time progresses, the EV and AC will extend allowing you to compare them against the PV.
If the BAC is 1000, the EAC is 1200, and the ETC is 900, what is the VAC?
Answer: A. -200
The VAC (variance at completion) is just a matter of figuring out delta between how much you thought you were going to spend before the project started, the budget at completion (BAC), and how much you think the project is going to cost knowing what you know today, the estimate at completion (EAC). So in this example, the VAC is -200, since VAC = BAC – EAC. That means the project is expected to cost $200 more than originally planned.
If the EAC is 2000, the PV is 500, and the AC is 400, what is the ETC?
Answer: C. 1600
The ETC (estimate to complete) is actually quite simple. Just figure out take the EAC (estimate at completion) and subtract the AC (actual cost), or ETC = EAC-AC; the PV is irrelevant for the ETC. What you are doing is looking at the difference between the updated estimate on how much the project will cost, EAC, and how much you have already spent, AC. The result is how much more you expect to spend to complete the project, EAC.
If the BAC is 1000, the CPI is 0.9, and the SPI is 1.2, what is the EAC?
Answer: C. 1111.11
One method that the EAC (estimate at completion) can be calculated is BAC (budget at completion) divided by CPI (cost performance index), or EAC = BAC/CPI; the SPI is irrelevant for the EAC. Because the CPI is under 1.0, then you know that the project is not doing well. Therefore, you can conclude that the project will cost more than originally planned, which is 1000, the BAC, without even doing any math. One way to look at the problem is “If this $1000 project is only getting $0.90 of value out of every dollar so far, if we continue at this pace, how much will this project cost by the time we are done?”
If a project has a Cost Variance (CV) of 1000 and a Schedule Variance (SV) of -1000, what does it mean?
A. The project is under budget and behind schedule.
B. The project is over budget and ahead of schedule.
C. It is impossible to have a negative SV.
D. The Overall Variance (OV) is 0.
Answer: A. The project is under budget and behind schedule.
For both Cost Variance (CV) and Schedule Variance (SV), if the number is positive, then it is good. Conversely, if the number is negative, then it is bad. So CV of 1000 is good (under budget), while SV of -1000 is bad (behind schedule). There is no such thing as Overall Variance (OV).
One of the reports you are asked to produce is an S-curve diagram. Through your experience, you know that S-curve data is based on earned value. Therefore, you must __________ at the start of the project in order to have accurate S-curve reports.
A. Set a baseline
B. Use project management software
C. Create a contingency plan
D. Perform a variance analysis
Answer: A. Set a baseline
In order to provide earned value, a baseline must be set, usually at the beginning of the project. This will allow project managers to measure the original snapshot against actual performance.
One of your monthly reports claim that your project has a SV of -1000. How would you describe it to your sponsor?
A. The project is behind schedule
B. The project is ahead of schedule
C. Impossible to have a negative SV
D. Not enough information
Answer: A. The project is behind schedule
SV (schedule variance) is simply a measure of how the project is performing in terms of schedule. A positive number is good, ahead of schedule, while a negative number is bad, behind schedule. SV is derived from EV (earned value) minus PV (planned value).
One of your monthly reports claim that your project has a CV of 2000. How would you describe it to your sponsor?
A. The project is $2000 over budget
B. The project is $2000 under budget
C. CV of anything over 1000 is irrelevant
D. Not enough information
Answer: B. The project is $2000 under budget
CV (cost variance) is simply a measure of how the project is performing in terms of cost. A positive number is good, under budget, while a negative number is bad, over budget. CV is derived from EV (earned value) minus AC (actual cost).
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