A program has a BAC of $1,750,000 and is expected to last two years. The program is currently at the third milestone which represents 35 percent of the program work. As it happens, this program has al

Question

Options

• ASchedule, because the program's planned value is only $700,000.
• BCost, because the program has a cost variance of -7,500
• CSchedule, because the program has a schedule performance index of .88.
• DCost, because the program has an estimate to complete of $1,151,429.

• A
  3% (1)
• B
  12% (4)
• C
  82% (28)
• D
  3% (1)

Explanation

Using Earned Value Management (EVM): EV (Earned Value) = 35% × $1,750,000 = $612,500. AC (Actual Cost) = $620,000. PV (Planned Value) = 40% × $1,750,000 = $700,000. SPI (Schedule Performance Index) = EV ÷ PV = $612,500 ÷ $700,000 ≈ 0.875, which rounds to 0.88 - an SPI below 1.0 confirms the program is behind schedule. CV (Cost Variance) = EV − AC = $612,500 − $620,000 = −$7,500 (option B is mathematically true but the question asks about what management is CONCERNED about - schedule slippage). CPI = EV ÷ AC = $612,500 ÷ $620,000 ≈ 0.9879; ETC = (BAC − EV) ÷ CPI ≈ $1,151,429 (option D is true but identifies a cost concern). The primary performance issue management flagged is schedule slippage, confirmed by SPI = 0.88.

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