Ch 9 - Cost Control

Question 1

What are the three variables in Earned Value Measurement (EVM)?

Answer 1

1. PV: planned value
2. AC: actual cost
3. EV: estimated value

Question 2

What is planned value (PV)?

Answer 2

the approved budget assigned to the work to be completed during a given time period

Question 3

What is actual cost (AC)?

Answer 3

money that’s actually been expended during the given time period for completed work

Question 4

What is estimated value (EV)?

Answer 4

value of work completed to date compared to the budget

Question 5

How is EV (estimated value) figured?

Answer 5

The percentage of work completed x the budget amount for that item
Ex: 25% completed and budget is $1000 = $250

Question 6

What is the most common EVM used?

Answer 6

cost variance

Question 7

What is the formula for cost variance?

Answer 7

CV = EV - AC

Question 8

What does cost variance (CV) analyze?

Answer 8

How actual costs compare to the budgeted amount. Positive number = below budget, negative number = over budget

Question 9

What does schedule variance (SV) analyze?

Answer 9

compares an activity’s progress to date to the estimated progress, displayed in cost..
Is project ahead, on time or behind schedule for the planned period

Question 10

What is the formula for SV (schedule variance)

Answer 10

SV = EV - PV
*Negative number = behind schedule
Positive number = ahead of schedule

Question 11

CV (cost variance) and SV (schedule variance) are what type of indicators?

Answer 11

efficiency indicators used to predict future project performance

Question 12

What is the cost performance index (CPI)?

Answer 12

measure value of work completed at the measurement date against the actual cost

Question 13

What is CPI (cost performance index) the most critical of all EVM according to PMBOK guide?

Answer 13

tells you the cost efficiency for the work completed to date or at the completion of the project .
CPI less than 1 = spending more than anticipated for work completed at measurement date
CPI greater than 1 = spending less than anticipated

Question 14

Formula for Cost performance index (CPI)

Answer 14

CPI = EV / AC

Question 15

What does the schedule performance index (SPI) measure?

Answer 15

measures the progress to date against the progress that was planned

Question 16

How should the SPI (schedule performance index) formula be used

Answer 16

in conjunction with an analysis of the critical path to determine if the project will finish ahead of time or behind schedule

Question 17

How are results for SPI (schedule performance index) interpreted?

Answer 17

result greater than one means project is progressing ahead of schedule.
result less than one means project is behind schedule

Question 18

What is the formula for SPI (schedule performance index)

Answer 18

SPI = EV/PV

Question 19

What does the Estimate at Completion (EAC) analysis indicate?

Answer 19

forecast of the total cost of the project based on both current project performance and remaining work

Question 20

What is budget at completion (BAC)?

Answer 20

total amount of budget for a work package, control account, schedule activity, or the project

Question 21

What is estimate to complete (ETC)?

Answer 21

cost estimate for remaining project work. Typically provided by team members actually working on project activities

Question 22

What is the EAC formula?

Answer 22

EAC = AC + ETC

Question 23

What would a comparison of BAC (budget at completion) and ETC (estimate to complete) tell you?

Answer 23

current estimate of any deviation from budgeted amount

Question 24

What is To-Complete Performance Index (TCPI)?

Answer 24

the project performance level remaining work must achieve in order to meet the stated financial or scheduled goals.

Question 25

What is the formula for TCPI (To-Complete Performance Index)?

Answer 25

TCPI = (BAC - EV) / (BAC - AC)

Question 26

How are TCPI results be interpreted

Answer 26

result of 1.0 = keep doing what you’re doing, On schedule/budget
>1 = ahead of schedule/budget, do not need to perform as efficiently
<1 = behind schedule/budget, need to perform more efficiently to meet BAC goal

Question 27

What is variance analysis?

Answer 27

comparison of planned project results to actual project results

Question 28

What does variance analysis look at when used in the cost control process?

Answer 28

looks at difference between cost control baseline and actual performance, with VAC (variance at completion) frequently being used

Question 29

What does the variance at completion (VAC) measure?

Answer 29

the difference between budget at completion and estimate at completion

Question 30

What is the formula for VAC (variance at completion)

Answer 30

VAC = BAC - EAC

Question 31

In an EVM chart, if earned value is above planned value, what does this mean?

Answer 31

means you’ve completed more work than you’ve planned by that date (ahead of schedule)

Question 32

In an EVM chart which info is on the horizontal axis, and which is on the vertical axis?

Answer 32

Time is horizontal, cost is vertical

Question 33

In an EVM chart, if the actual cost is below the earned value, what does this mean?

Answer 33

You’re spent less for the work you’ve completed than planned (below budget)

Question 34

In an EVM chart, if the earned value is below the planned value, what does this mean?

Answer 34

behind schedule (completed less work than you’ve planned

Question 35

In an EVM chart, if actual cost is above earned value, what does this mean?

Answer 35

You’ve spent more for work than you’ve completed than planned (over budget)