ITPEC FE Morning April 2019 Question 53
A project is planned to complete in 12 months and the budget for the completion of the project is $100,000. After six months, it is found that $60,000 are spent, but only 40% of the work is completed. If the Cost Performance Index (CPI) is not changed, what is the estimated amount (in dollars) required to complete the remaining tasks of the project?
Explanation
90,000 dollars — with the CPI unchanged, the remaining work costs its budgeted value divided by the CPI.
- •Earned value: EV = 0.4 × 100,000 = 40,000
- •Cost performance index: CPI = EV ÷ AC = 40,000 ÷ 60,000 = 2 ÷ 3
- •Budgeted cost of the remaining work: BAC − EV = 100,000 − 40,000 = 60,000
- •Estimate to complete: ETC = 60,000 ÷ (2 ÷ 3) = 90,000
Each dollar of budgeted work has cost 1.5 dollars so far, and the remaining 60,000 dollars of work will cost the same way.
Answer (c)
Why not others:
- •(a) 40,000 — the unspent budget, 100,000 − 60,000 (it also equals EV); it ignores both the work still to do and the overrun
- •(b) 60,000 — the remaining work at its budgeted cost, BAC − EV, without dividing by the CPI of 2 ÷ 3
- •(d) 150,000 — the estimate at completion, EAC = AC + ETC = 60,000 + 90,000; it includes the 60,000 dollars already spent, but the question asks only for the remaining tasks
Key rule: ETC = (BAC − EV) ÷ CPI is the cost still to come; EAC = AC + ETC is the whole project's cost; read which one the question asks for.
Project Management · AI-written, may contain errors
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