You are the program manager for the GHT Program for your company. This program has a budget at completion of $789,000 and is currently 40 percent complete, though it was scheduled to be 50 percent…

The correct answer is C. 3. This question uses Earned Value Management (EVM). First, calculate Earned Value (EV): EV = BAC × % complete = $789,000 × 0.40 = $315,600. Actual Cost (AC) = $325,000. The Cost Performance Index (CPI) = EV / AC = $315,600 / $325,000 ≈ 0.971. A CPI of 0.971 means for every dollar…

Program Life Cycle

Question

You are the program manager for the GHT Program for your company. This program has a budget at completion of $789,000 and is currently 40 percent complete, though it was scheduled to be 50 percent at this time. Your program has spent $325,000 of the budget to date. Based on this information, how many pennies is your program losing per dollar spent on the work?

Options

How the community answered

(59 responses)

A
10% (6)
B
3% (2)
C
81% (48)
D
5% (3)

Explanation

This question uses Earned Value Management (EVM). First, calculate Earned Value (EV): EV = BAC × % complete = $789,000 × 0.40 = $315,600. Actual Cost (AC) = $325,000. The Cost Performance Index (CPI) = EV / AC = $315,600 / $325,000 ≈ 0.971. A CPI of 0.971 means for every dollar spent, only $0.971 worth of work is being accomplished - a loss of about $0.029, or roughly 3 pennies per dollar (Choice C). The schedule status (40% complete vs. 50% planned) reveals a Schedule Variance but does not affect the cost efficiency calculation. The CPI is the key metric here, and the loss per dollar = 1 - CPI ≈ 0.03 = 3 cents = 3 pennies.

Topics

#Earned Value Management (EVM)#Cost Performance Index (CPI)#Program Performance Monitoring#Financial Control

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