PMI’S PMP CERTIFICATION PROGRAMME

PMBOK 6th Edition

FACILITATOR: DR. JOSEPH ISHMAEL KHAN
2019

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EARNED VALUE MANAGEMENT

ASSIGNMENT

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 OVERVIEW: EARNED VALUE MANAGEMENT

DEFINITION OF EVM METRICS

 Planned Value (PV) — how much work was scheduled to date
 Earned Value (EV) — how much work was completed to date
 Actual Cost (AC) — the amount of money spent so far
 Budget at Completion (BAC) — the total budget for the project
 Estimate at Completion (EAC) — the estimated total amount of money needed to
be put into the project based on the information available as today
 Estimate to Completion (ETC) — how much more do we need to put into the
project to complete it
 Variance at Completion (VAC) — the difference between the estimated total cost
and the original budget
 Cost Performance Index (CPI) — ratio between EV and AC, to reflect whether the
project work is under / on / over budget in relative terms
 Schedule Performance Index (SPI) — ratio between EV and PV, to reflect
whether the project work is ahead of / on / behind schedule in relative terms
 To Complete Performance Index (TCPI) — the efficiency needed to finish the
project on budget, it is the ratio between budgeted cost of work remaining and
money remaining

 EVM Estimate At Completion (EAC)

FORMULAS  EAC = BAC/CPI
If we believe the project will continue to spend at the
 SV = EV – PV
same rate up to now (e.g. the delay is caused by reasons
 CV = EV – AC which is likely to continue)
 EAC = AC + (BAC-EV)
 SPI = EV/PV If we believe that future expenditures will occur at the
original forecasted amount (no more delays of the same
 CPI = EV/AC
kind in future)
 VAC = BAC – EAC  EAC = AC + [(BAC-EV)/(SPI*CPI)]
If we believe that both current cost and current schedule
performance will impact future cost performance
 EAC = AC + New Estimate
If we believe the original conditions and assumptions are
wrong
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 QUESTIONS
1. With reference to the diagram below, it can be inferred that the project is
currently:

a. ahead of schedule and under budget

b. ahead of schedule and over budget
c. behind schedule and under budget
d. behind schedule and over budget

2. With reference to the diagram below, it can be inferred that the project is
currently:

a. ahead of schedule and under budget

b. ahead of schedule and over budget
c. behind schedule and under budget
d. behind schedule and over budget

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3. With reference to the diagram below, it can be inferred that the project is
currently:

a. ahead of schedule and under budget

b. ahead of schedule and over budget
c. behind schedule and under budget
d. behind schedule and over budget

4. If a project has a Schedule Performance Index (SPI) of 0.90, this means that:
a. 90% of the work planned to date has been completed

b. 90% of the work of the whole project has been completed

c. 90% of the budget planned to date has been spent

d. 90% of the project budget has been spent

5. If a project has a Cost Performance Index (CPI) of 0.90, this means that:
a. 90% of the work planned to date has been completed
b. 90% of the budget planned to date has been spent
c. 111% of the budget planned to date has been spent
d. 111% of the project budget has been spent

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6. If a project has a To Complete Performance Index (TCPI) of 0.90, this means
that:
a. 90% of the work planned up to today has been completed
b. 90% of the budget planned up to today has been spent
c. the project can spend money at a rate 11% higher than planned and still meet
the project budget
d. the project can spend money at a rate 10% lower than planned to meet the
project budget

7. A project with both Schedule Performance Index (SPI) and Cost Performance
Index (CPI) of 0.80. The project is currently:
a. ahead of schedule and under budget
b. behind schedule and under budget
c. ahead of schedule and over budget
d. behind schedule and over budget

8. According to EVM, which term below represents the outstanding amount of

money required to finish the project?
a. Planned Value (PV)
b. Earned Value (EV)
c. Estimate to Complete (ETC)
d. Estimate at Completion (EAC)

9. According to EVM, which term below represents the budgeted cost of the work
to be completed to date?
a. Planned Value (PV)
b. Earned Value (EV)
c. Estimate to Complete (ETC)
d. Estimate at Completion (EAC)

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10. A project with Earned Value (EV) = $1000, Actual Cost (AC) = $800 and Planned
Value (PV) = $800. What is the Schedule Variance (SV)?
a. $200
b. $0
c. -$100
d. -$200

11. A project with Earned Value (EV) = $1000, Actual Cost (AC) = $800 and Planned
Value (PV) = $800. What is the Cost Variance (CV)?
a. $200
b. $0
c. -$100
d. -$200

12. A project with Earned Value (EV) = $250, Actual Cost (AC) = $200 and Planned
Value (PV) = $350. What is the Schedule Performance Index (SPI)?
a. 1.25
b. 0.80
c. 0.71
d. 1.40

13. A project with Earned Value (EV) = $250, Actual Cost (AC) = $200 and Planned
Value (PV) = $350. What is the Cost Performance Index (CPI)?

a. 1.25
b. 0.80
c. 0.71
d. 1.40

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14. For the project with original project budget $1000 and both the Cost
Performance Index (CPI) and Schedule Performance Index (SPI) equal 1.
Assuming the project will continue to spend money at the same rate, what is the
Estimate At Completion (EAC) of the project?

a. $833
b. $933
c. $1,000
d. $1,033

15. For the project with Earned Value (EV) = $360, Actual Cost (AC) = $400 and both
Cost Performance Index (CPI) and Schedule Performance Index (SPI) equal
0.90. The original project budget is $1,000. Assuming the remaining work will
be impacted by the current cost performance and current schedule
performance, what is the Estimate At Completion (EAC) of the project?

a. $1,090
b. $1,190
c. $1,290
d. $1,390

16. For a project with Estimate at Completion (EAC) = $120,000 and Cost
Performance Index (CPI) is 0.90. What is the Budget at Completion (BAC)?

a. $108,000
b. $118,000
c. $158,000
d. $208,000

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17. You are the project manager of a housing project in which a total of 10 houses
are to be built over 10 months (1 house per month). The total budget for the
housing project is $1,000,000. The project is now at the end of the 6th month
with 5 houses built and $500,000 spent. The project is behind schedule owing
to a work strike for a month. The Cost Performance Index (CPI) for the project
is:
a. 1.0
b. 0.9
c. 1.1
d. 1.2

18. You are the project manager of a road paving project. A total of 10km of road is
to be paved over a 5-month period. The total budget for the project is $10,000.
The project is now at the end of the 3rd month with 8km of road paved and
$8,000 spent. The Schedule Performance Index (SPI) for the project is:
a. 0.78
b. 0.98
c. 1.20
d. 1.33

19. You are using the earned value technique for progress reporting for an existing
project. You send out a report displaying the following information listed below.
Use the information from the report to answer the next 3 questions. (Round off
numbers when necessary.)

PV = $4,000
EV = $3,200
AC = $4,500
BAC = $10,000

1. What is the Cost Variance (CV)?

2. What is the Schedule Variance (SV)?

3. What is the Cost Performance Index (CPI)?

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20. You are the Project Manager for the modification and production of a small
gadget. The contract has a two-year period of performance and you are halfway
done with the contract. Your cumulative “cum” to-date Earned Value (EV) is
$500,000 and the cum-to-date Actual Cost (AC) is $600,000. Your budget at
completion (BAC) is $1,000,000. You want to calculate an estimate at
completion (EAC) using your cost performance index since the expectation is
current performance will be typical of future performance. What is your
estimate at completion? (Round the numbers)

21. The project's budget at completion is $130,000; the actual cost is $80,000, and
the cost variance is - $5,000. What is the to-complete performance index?

22. A project manager has a budget of $60,000 to complete a six-month project.

Halfway through the project, stakeholders ask if the $60,000 budget will cover
the remaining project work. At the halfway point, the project had a planned
value of $45,000, and $90,000 at completion. To date, the project has earned
$20,000 on actual costs-of $25,000. Find the project's Estimate at Completion
for the typical and atypical situations.

23. What is the project's cost performance index for a project with the following
work performance data: Earned Value = $300,000 and Cost Variance = -
$140,000?

24. A project has a schedule performance index of and 0.93 and the cost
performance index of 0.94. What is the earned value status of the project?

25. The project's budget is US$750,000. At day 42, 40% of the project is completed,
at a cost of US$500,000. After the project manager reports the cost performance
index, the customer refuses to add more funds to the project. What is the
project's to-complete performance index?

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26. What is the status of project ABC having with the following data?

EV = $4000
PV = $8000
AC = $6000

27. Based on the project information below, which project is in trouble?

PROJECT NAME PV AC EV BAC

PROJECT A 200 260 300 400

PROJECT B 200 160 100 400

28. A 10-month project with a budget of US$100,000 and monthly expenditure of

US$7,500 encounters a manufacturing process failure after two months. As a
result of the failure, 80% of the work is incomplete. Before considering the next
steps, the stakeholders request the project's performance. What is the project's
cost performance index at the time of the failure?

29. The board of directors approves an $80 million budget to execute a 40-month
project. Ten months into the project, the project engineer reviews the project's
status, and finds the contractor was paid $30 million. The project engineer
reports that progress is 50% ahead of schedule. According to project planning,
the monthly expenditure should be $2 million. What is the project's cost
variance?

30. A project is planned for four days with an allocated budget of $4,000. The
project manager allocated a resource for $1,000 per day to complete the work
in the scheduled time. At the end of the second day, the amount of work
performed is evaluated at $1,600. If the productivity rate of the resource
remains the same, when is the project expected to be completed?

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31. When a project PV is lower than its AC and its EV is higher than both its PV and
AC, the project can be seen as being?

32. What could you conclude about a project with a planned value of $1,000, an
earned value of $900and an actual cost $750?

33. The project's schedule variance is 0.1 and the planned value is 0.4. What is the
SPI on the project?

34. According to the plan, a project should have spent $56,000 to date, which
represents 1,000 hours of work at a labour rate of $56 per hour. While
monitoring the costs, the project manager identifies a cost performance index
of 0.8. The project's actual cost is $80,000. What is the status of the project?

35. What is the schedule variance of Project ABC when the budgeted costs are
$50,000, $40,000 of work was accomplished and the actual cost is $60,000?

36. A project has a PV = $56,000 a cost performance index of 0.8; an AC= $80,000.
The project manager also predicts that the project will finish with a total cost of
$200,000. What is the earned value of the project?

37. What is the cost performance index of a project with the following EVM values?

EVM VALUES
EV $400
PV $450
AC $500

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38. Based on the information below. What should you do as the project manager?

EVM VALUES
EV $2000
PV $3000
AC $2000

39. Based on the information in the table below state the project’s EAC assuming
that the work situation to-date will improve.

EVM VALUES
BAC $100,000
AC $20,000
EV $14,000
ETC $100,000

40. Given the information below. What is the project’s EAC for a typical situation?

EVM VALUES
CPI 1.3
SPI 2.0
BAC $52,000

41. A project manager is presented with an EVM scenario as shown below.

Cumulative Cost Curve Project Progress Curve

PV
PV

AC
$4000 AC
20% Scope
completed
$3000

4th Month 4th Month

Based on the information in the charts, what is the status of this project?

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42. Based on the information given in the table below. What can the overall status
of the project can be described as?

Work Package A B C D E
Budgeted Cost 100 80 80 150 200
Percent Complete 100 100 100 80 50
Actual Cost 100 100 100 150 80

43. A project is scheduled to take 10 months to complete with an approved budget

of 1.2 million dollars. After 4 months, the project’s actual cost is 450,000.00 and
two-thirds of the work not completed. In terms of the project status at the time
of the performance review, what is the project’s SPI?

44. Based on the information in the table below state the project’s estimate at
completion if the initial project plan is no longer valid.

EVM VALUES
BAC $100,000
Ac $20,000
EV $14,000
ETC Based on Bottom Up Summation $100,000

45. A project is scheduled to take 12 months to complete with an approved budget

of 2.4 million dollars. After 5 months, the project’s actual cost is 550,000.00 and
20% of the work is completed. In terms of the project status at the time of the
performance review, what is the project’s SPI?

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