A project has an estimated duration of 10 months with a total budget of US$220,000. At the end of the fifth month, it is estimated that at completion, the project will incur US$250,000. If the…

The correct answer is B. US$120,000. Using the Estimate at Completion (EAC) formula where remaining work is performed at the original planned rate: EAC = AC + (BAC − EV). Solving for EV: EV = AC + BAC − EAC = $150,000 + $220,000 − $250,000 = $120,000. This formula assumes the ETC (Estimate to Complete) equals BAC…

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Question

A project has an estimated duration of 10 months with a total budget of US$220,000. At the end of the fifth month, it is estimated that at completion, the project will incur US$250,000. If the actual cost (AC) calculated is US$150,000, what is the earned value (EV) of the project?

Options

AUS$-30,000
BUS$120,000
CUS$370,000
DUS$400,000

How the community answered

(40 responses)

A
13% (5)
B
78% (31)
C
5% (2)
D
5% (2)

Explanation

Using the Estimate at Completion (EAC) formula where remaining work is performed at the original planned rate: EAC = AC + (BAC − EV). Solving for EV: EV = AC + BAC − EAC = $150,000 + $220,000 − $250,000 = $120,000. This formula assumes the ETC (Estimate to Complete) equals BAC minus EV (i.e., remaining work is done at budget). The result shows the project has earned $120,000 worth of work while spending $150,000, indicating a cost overrun (CPI = 120,000 ÷ 150,000 = 0.8). The other options do not satisfy this formula: −$30,000 (A) and $370,000 (C) and $400,000 (D) are mathematically incorrect.

Topics

#Earned Value Management#Estimate At Completion#Cost Performance#Forecasting

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