#Measuring Project Performance - Earned Value Management System# By SN Panigrahi

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler & Public Speaker.
He is an International-Corporate Trainer, Mentor & Author
He has diverse experience and expertise in Project Management, Contract
Management, Supply Chain Management, Procurement, Strategic
Sourcing, Global Sourcing, Logistics, Exports & Imports, Indirect Taxes –
GST etc.
He had done more than 150 Workshops Globally on above
Published more than 500 Articles; More than 60 Youtube Presentations &
70 SlideShares
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Have been Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India)
ZED Consultant – Certified by QCI – MSME (Govt of India)
Member Board of Studies, IIMM
Co-Chairman, Indirect Tax Committee, FTAPCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
Hyderabad
SN Panigrahi, Essenpee Business Solutions, India

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Earned Value Management (EVM) – It is a very effective and a commonly used
Project Management Methodology or Technique that combines schedule, and
Cost to track the performance of the project against project
baselines and for measuring project performance and progress in an
objective manner.
 In a typical and conventional project management methodology, project
progress comprising of thousands of activities is measured against schedule
and cost as two different scales
 The technique of Earned Value Analysis (EVA) integrates cost and schedule
performance in one report unlike traditional reports in which cost and schedule
are reported separately
Note : Examining the cost and schedule variances concurrently, it is possible to
get a holistic and a much more realistic view of the project's progressSN Panigrahi, Essenpee Business Solutions, India 4

SN Panigrahi, Essenpee Business Solutions, India 5
 Are we as per Schedule / Behind or Ahead of Schedule?
 How Efficiently are we using Time?
 How Effectively must we use our Remaining Resources?
 When we are Likely to Finish Work?
How are we Doing Cost-wise?
 Are we as per Budget / Over or Under Budget?
 How Efficiently are we using our Resources?
 What is the Project Likely to Cost?
 Will we be under or Over Budget?
 What will the Remaining Work Cost?
How are we Doing Schedule-wise?
Project Review Questions
Where are
We Now?
Where are
We Going?

Earned Value Management Systems allow us to understand
 Where are we now?
 Where are we going?

Planned Value
(PV)
Earned Value
(EV)
Budget At
Completion (BAC)
Actual Cost
(AC)
Approved Budget (Cost) for activities scheduled to be performed during
a given period. Cost and Schedule baseline refers to the physical work
scheduled and the approved budget to accomplish the scheduled work.
Quantification of the “Worth / Value” of the work done to date.
EV tells you, in physical terms, what the project has accomplished or
Worth or Value of Work Completed as on given Point of Time.
Actual Cost Incurred or Spent on the project as on given Point of
Time
The Budgeted Amount for the Total Work / Complete Project

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A B C D E
Budget At Completion (BAC) – Say 100
As per Planning
Planned Value (PV) - 60
Earned Value (EV) - 50
EV = 50
PV = 60
AC = 70
BAC = 100
Basic Understanding of Terms
Review
Actual

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Schedule Variance - is a measure of the schedule performance of a project - gives information
about how far - behind or ahead of schedule the project is.
SV = EV – PV
If SV > 0 - ahead of schedule
If SV = 0 – as per schedule
If SV < 0 – behind schedule
When the project is completed, Schedule Variance becomes zero (SV=0) because at the
end of the project, all the Planned Value has been earned (PV = EV)
In case after a project completion, if SV doesn’t equal to 0, that means project is terminated
or incomplete.
When activity is completed even if completed one month later, then PV=EV, SPI =1, SV = 0

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Cost Variance - is a measure of cost performance of a project
(CV) = EV- AC
If CV > 0 – Below Budget
If CV = 0 – as per Budget
If CV < 0 – Above Budget
Cost variance (CV) and schedule variance (SV) are negative, but in case the cost
variance is lower than the schedule variance (CV < SV), it means that the project
under spent because all work was not completed, but overspent for work that was
done.
SN Panigrahi, Essenpee Business Solutions,
India

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Scheduling Performance Index (SPI) - Measures scheduling efficiency - is a measure of how close
the project is to being completed compared to the schedule.
SPI = EV/PV
If SPI > 1 - ahead of schedule
If SPI = 1 – as per schedule
If SPI < 1 – behind schedule

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Cost Performance Index (CPI) - Measure of the financial effectiveness and efficiency of a project. It
represents the amount of completed work for every unit of cost spent.
CPI = EV/AC
If CPI > 1 – Below Budget
If CPI = 1 – as per Budget
If CPI < 1 – Above Budget
CV < 0 or CPI < 1, indicates Cost risk – that means project costs could go higher than planned.

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A B C D E
As per Planned
EV = 50
PV = 60
AC = 70
BAC = 100
SV = EV – PV
= 50 – 60
= - 10
SPI = EV/PV
= 50/60
= 0.83
Behind
Schedule
CV = EV – AC
= 50 – 70
= - 20
CPI = EV/AC
= 50/70
= 0.71
Over
Budget
India
Review
Actual

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Cost & Schedule Performance Measure
India

Percent Complete Indices - Indicates how much of the work
accomplished represents of the total budgeted (BAC) and
actual (AC) dollars to date.
% Complete = EV / BAC X 100
% Spent = AC / BAC x 100
EV = 50
PV = 60
AC = 70
BAC = 100
% Complete = EV/BAC X 100 = 50 / 100 *100= 50%
% Spent = AC/BAC x 100 = 70 / 100*100 = 70%

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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
Ans : Solution: D
As of today, AC > EV = over
budget and EV < PV =
behind schedule, so the
project is both “behind
schedule and over budget”.
A. ahead of schedule and
under budget
B. ahead of schedule and
over budget
C. behind schedule and
under budget
budget
Solution: C
As of today, AC < EV =
under budget and EV < PV =
behind schedule, so the
project is “behind schedule
and under budget”.
A. ahead of schedule and under
budget
B. ahead of schedule and over
budget
C. behind schedule and under
budget
budget
Solution: B
As of today, AC > EV = over
budget and EV > PV = ahead
of schedule, so the project is
“ahead of schedule and over
budget”.

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Estimate at Completion (EAC) - the forecasted value of the project when it is complete. It tells
how much may have to spend (Revised Budget) to complete the project.
There are 4 types of situations depending on assumptions and accordingly 4 types of calculations
a) EAC = BAC/CPI – assumption : future performance will be same as the past performance; i.e. project will
continue at the same rate of spending as in the past - the CPI will remain the same for the rest of the
project. (SPI at 100%)
b) EAC = AC + (BAC – EV) – assumption : past performance deviated from budget estimate; however, from
now onwards the remaining work is expected to be completed (Future work) at the planned rate (SPI
at 100% and CPI at 100%) - atypical of future.
c) EAC = AC + (BAC – EV)/(CPI*SPI) – assumption : past performance deviated from both budget estimate
(over budget) and schedule (behind schedule), current variances are thought to be typical of future. ie
both CPI & SPI influence remaining work.
d) EAC = AC + Bottom up Estimate to Complete – assumption : initial cost estimate was fundamentally
flawed, and needs to re-calculate the new cost estimate for the remaining work for the project.

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A B C D E
EV = 50
PV = 60
AC = 70
BAC = 100
Estimate at Completion (EAC)
Assumption : Future
Performance will be same
as the past performance in
terms of Cost.
You will continue in the
same Rate of
Spending. (SPI at 100%)
Assumption : past
performance deviated from
budget estimate; however,
from now onwards the
remaining work is expected
to be completed (Future
work) at the planned rate
Assumption : past
performance deviated from
both budget estimate (over
budget) and schedule (behind
schedule), current variances
are thought to be typical of
future. ie both CPI & SPI
influence remaining work.
Assumption : initial cost
estimate was fundamentally
flawed, and needs to re-
calculate the new cost
estimate for the remaining
work for the project.
EAC = BAC/CPI EAC
= AC + (BAC – EV)
EAC = AC + (BAC – EV) /
(CPI*SPI)
EAC = AC + Bottom up
Estimate to Complete
= 100 / 0.71 = 140.84 = 70 + (100-50) = 120 70 + (100-50) / 0.71*0.83
= 154.85

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Estimate to Complete (ETC) – indicates how much money will be required to
complete the remaining task. There are 2 types of situations depending on
assumptions and accordingly 2 types of calculations.
a) ETC = EAC – AC – assumption : work is proceeding as per plan
b) ETC = Re-estimate – assumption : A more accurate way is to re-
estimate cost of the remaining work from the bottom-up.
India
Estimate to Complete (ETC)

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A B C D E
EV = 50
PV = 60
AC = 70
BAC = 100
Estimate to Complete (ETC)
Assumption : work is proceeding as per plan Assumption : initial cost estimate was
fundamentally flawed
ETC = EAC – AC ETC = Re-estimate
Assumption - 1 Assumption - 2 Assumption - 3
=140.84 – 70 =
70.84
=120 - 70 =
50
=154.85 – 70
= 84.85
India

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Variance at Completion (VAC) - is a comparison of the original budget at completion (BAC)
and the revised forecast (EAC).
VAC = BAC – EAC
A negative VAC (<0) is an indicator that the project may exceed the BAC – project cannot
be completed with the approved budget - may require either an additional funding
allocation or the elimination of some of the project scope.
A positive VAC (>0) indicates the project will be completed in less than the budget -
not utilize the allocated budget – budget funds remain excess.
India
Variance at Completion (VAC)

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To Complete Performance Index (TCPI) - defined as the ratio of work remaining to be accomplished
and the amount of unspent or remaining funds.
TCPI = (Remaining Work)/(Remaining Funds)
TCPIBAC = (BAC – EV) / (BAC – AC) - If the project is under budget
TCPIEAC = (BAC – EV) / (EAC – AC) - If the project is over budget
TCPI < 1 : indicates that to accomplish efficiency can be less than the efficiency at which the
work that has been completed -project is in good shape
TCPI > 1 : need to perform with better cost performance efficiency than the efficiency at
which the work that has been completed – project is not in good shape
TCPI = 1 : project may continue to work with same cost performance efficiency as in the past -
Project is OK
India
To Complete Performance Index (TCPI)

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A B C D E
EV = 50
PV = 60
AC = 70
BAC = 100
Variance at Completion (VAC) To Complete Performance Index (TCPI)
VAC = BAC – EAC TCPIEAC = (BAC – EV) / (EAC – AC)
Assumption - 1 100 - 140.84 = (-) 40.84 = (100 – 50) / (140.84-70) = 0.71
Assumption - 2 100 – 120 = (-) 20 = (100 – 50) / (120-70) = 1.00
Assumption - 3 100 - 154.85 = (-) 54.85 = (100 – 50) / (154.85-70) = 0.59
Assumption - 4 Re-Estimation : Bottom Up Re-Estimation : Bottom Up

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Budget at Completion
(BAC)
The Total Budget for the Project - Baseline
Planned Value (PV) How much worth of work was Scheduled (Planned) to Date
Earned Value (EV) How much worth of Work was Completed to Date % Work Completed * BAC
Actual Cost (AC) The Amount of Money Spent so far
Scheduled Variance (SV) The difference between the cost of work performed and the
cost of work scheduled
SV = EV - PV
Cost Variance (CV) The difference of the actual cost and the expected cost. CV = EV - AC
Schedule Performance
Index (SPI)
Ratio between EV and PV, to reflect whether the project work
is ahead of / on / behind schedule in relative terms
SPI = EV / PV
If a project has a Schedule Performance Index (SPI) of 0.90, this means that:90%
of the work planned to date has been completed
Cost Performance Index
(CPI)
Ratio between EV and AC, to reflect whether the project work
is under / on / over budget in relative terms
CPI = EV / AC
Cost Performance Index (CPI) of 0.90, this means, 111% (1/CPI) of the budget
planned to date has been spent
Estimate at Completion
(EAC)
The estimated total amount of money needed to be put into
the project based on the information available as today
(Revised Estimation)
1. EAC = BAC/CPI - If You will continue in the same Rate of Spending.
2. EAC = AC + (BAC – EV) - If the remaining work is expected to be
completed (Future work) at the planned rate
3. EAC = AC + (BAC – EV)/(CPI*SPI) – If both CPI & SPI influence remaining
work.
4. EAC = AC + Bottom up Estimate to Complete
if initial cost estimate was fundamentally flawed,
Estimate to Completion
(ETC)
How much more do we need to put into the project to
complete Balance Work.
ETC = EAC - AC
Variance at Completion
(VAC)
The difference between the Estimated total cost and the
original budget
VAC = BAC – EAC
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
TCPI = Remaining Work / Remaining Funds
= (BAC- EV) / (BAC – AC) – As per Original Budget
= (BAC- EV) / (EAC – AC) – As per Re-Estimate
EVM Method
SNPanigrahi,

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AC EVBAC PV
EAC
VAC CV SV
TCPI
ETC
CPI SPI

 Are we as per Schedule / Behind or Ahead of Schedule?
 How Efficiently are we using Time?
 How Effectively must we use our Remaining Resources?
Schedule Analysis & Forecasting
 When we are Likely to Finish Work?
How are we Doing Cost-wise?
 Are we as per Budget / Over or Under Budget?
 How Efficiently are we using our Resources?
 What is the Project Likely to Cost?
 Will we be under or Over Budget?
 What will the Remaining Work Cost?
 To Complete Performance Index (TCPI)
 Cost Variance (CV)
 Cost Performance Index (CPI)
 Estimate at Completion (EAC)
 Variance at Completion(VAC)
 Estimate to Complete (ETC)
 Schedule Variance (SV)
 Schedule Performance Index
 Time Estimate at Completion (EACt)
Cost Analysis & Forecasting
How are we Doing Schedule-wise?
Project Review Questions EVM Performance Measures

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
Solution: A
The Schedule Performance Index (SPI) represents the performance of the project in terms of schedule up
to the moment. If it is smaller than 1, less than 100% of the scheduled work has been completed to date.
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
Solution: C
The Cost Performance Index (CPI) represents the performance of the project in terms of budget up to
the moment. If it is smaller than 1, the project is currently over budget (i.e. has spent more than what has
been planned). 1/ 0.90 = 111%

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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
Solution: C
The To Complete Performance Index (TCPI) is the efficiency needed to finish the project on budget. If it is
smaller than 1, that means that we have more money left on the budget than the remaining Planned Value
(PV) to achieve. Therefore, in theory, we can spend more money yet can still finish the project on
budget. (However, in reality, it is generally preferred to finish the project under budget. A TCPI smaller than
1 is a good sign that the project is going healthy.)
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
Solution: D
CPI < 1 = over budget and SPI < 1 = behind schedule, so the project is both “behind schedule and over
budget”.

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)
Solution: C
By definition, Estimate to Completion (ETC) is the amount of money we need to put into the project from
today in order to complete it.
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)
Solution: A
By definition, Planned Value (PV) is how much value of work was scheduled to achieve to date.

A.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
Solution: C
As the project will continue to spend at the same current rate, the formula to be used would be:
EAC = BAC/CPI
EAC = $1000 / 1 = $1000
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
Solution: B
As the project will be impacted by the current cost performance and current schedule performance, the formula would
be:
EAC = AC + [(BAC-EV)/(SPI*CPI)]
EAC = $400 + [($1000 – $360) / (0.9 * 0.9)] = $1190

The total budget of your project is $200,000. Currently you have completed 30%
worth of work. However, you should have completed 40% worth of work. The
amount currently spent is $50,000. The initial plan is no longer valid and the
bottom up estimate to complete is $116,666. Calculate the estimate at
completion?
A: $190,000
B: $166,666
C: $140,000
D: $155,555
Ans : B

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Suppose you have a budgeted cost of a project at $900,000. The project is to be completed in 9
months. After a month, you have completed 10 percent of the project at a total expense of
$100,000. The planned completion should have been 15 percent. Explain how healthy the project
is by computing the CPI and SPI.
From the scenario, you can extract the following:
BAC = $900,000
AC = $100,000
The Planned Value (PV) and Earned Value (EV) can then be computed as follows:
Planned Value = Planned Completion (%) * BAC = 15% * $ 900,000 = $ 135,000
Earned Value = Actual Completion (%) * BAC = 10% * $ 900,000 = $ 90,000
Compute the earned value variances:
Cost Performance Index (CPI) = EV / AC = $90,000 / $100,000 = 0.90. This means for every $1 spent,
the project is producing only 90 cents in work.
Schedule Performance Index (SPI) = EV / PV = $90,000 / $135,000 = 0.67. This means for every
estimated hour of work, the project team is completing only 0.67 hours (approximately 40 minutes).
India

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Suppose you are managing a software development project. The project is expected to be completed in 8 months at a
cost of $10,000 per month. After 2 months, you realize that the project is 30 percent completed at a cost of $40,000.
You need to determine whether the project is on-time and on-budget after 2 months.
Step 1: Calculate the Planned Value (PV) and Earned Value (EV)
From the scenario,
•Budget at Completion (BAC) = $10,000 * 8 = $80,000
•Actual Cost (AC) = $40,000
•Planned Completion = 2/8 = 25%
•Actual Completion = 30%
Therefore,
•Planned Value = Planned Completion (%) * BAC = 25% * $ 80,000 = $ 20,000
•Earned Value = Actual Completion (%) * BAC = 30% * $ 80,000 = $ 24,000
Step 2: Compute the Cost Performance Index (CPI) and Schedule Performance Index (SPI)
•Cost Performance Index (CPI) = EV / AC = $24,000 / $40,000 = 0.6
•Schedule Performance Index (SPI) = EV / PV = $24,000 / $20,000 = 1.2
Interpretation: Since Cost Performance Index (CPI) is less than one, this means the project is over budget. For every
dollar spent we are getting 60 cents' worth of performance. Since Schedule Performance Index (SPI) is more than one,
the project is ahead of schedule. However, this has come at a cost of going over budget. If work is continued at this
rate, the project will be delivered ahead of schedule and over budget. Therefore, corrective action should be taken.
India

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
Solution: D
Since the road is assumed to be paved linearly, i.e. 2km of road per month. At
the end of 3rd month, the PV should be $6,000 (for 6km of road). The formula
to be used to calculate SPI is:
SPI = EV / PV
SPI = $8,000 / $6,000 = 1.33

For a project with Earned Value (EV) = $300, Actual Cost (AC) = $350 and Planned Value (PV) =
$400. The overall project budget is $1,000. Assume that you will continue to spend at the same
rate as you are currently spending. What is the Variance At Completion (VAC)?
A. -$150
B. $150
C. -$167
D. $167
Solution: C
As the project will continue to spend at the same current rate, the formula to be used would
be:
VAC = BAC – EAC
EAC = BAC/CPI
CPI = EV/AC
VAC = BAC – BAC/(EV/AC) =$1000 – $1000/($300/$350) = -$167

For the project with Earned Value (EV) = $300, Actual Cost (AC) = $250 and Planned Value (PV)
= $300. The original project budget is $1000. 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
Solution: A
As the project will continue to spend at the same current rate, the formula to be used would be:
EAC = BAC/CPI
CPI = EV/AC
EAC = BAC/(EV/AC) = $1000 / ($300/$250) = $833

For the project with Earned Value (EV) = $350, Actual Cost (AC) = $300 and Planned Value (PV) = $400.
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. $837
B. $937
C. $987
D. $1,280
Solution: B
As the project will be impacted by the current cost performance and current schedule performance, the
formula would be:
EAC = AC + [(BAC-EV)/(SPI*CPI)]
SPI = EV / PV = $350 / $400 = 0.875
CPI = EV / AC = $350 / $300 = 1.167
EAC = BAC/(EV/AC) = $300 + [($1000 – $350) / (0.875 * 1.167)] = $937

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Your project has a budget of $240,000 and is expect to last for 1 year, with the work and
budget spread evenly across all months. The project is now at end of the fourth month,
the work is on schedule, but you have already spent $120,000 of the project budget. What
is your COST Variance in this case?
1.-$40,000
2.$40,000
3.$240,000
4.$56,000
Correct Answers are : 1
Explanation :
A is the correct answer. The project is now in the fourth month, the work is on
schedule means , percentage of work completed = (4/12)*100
Cost Variance = Earn Value - Actual Cost Earn Value = total cost *
percentage of work actually completed = $240,000 * (4/12)=$80,000 CV =
$80,000 - $120,000 = -$40,000
India

The following chart contains information about the tasks in a project. Based on the chart, what
is the cost performance index (CPI) for Task 2?
•A. 0.8
•B. 1
•C. 1.25
•D. 1.8
Correct Answer: C
CPI = EV / AV
= 10,000 / 8,000
= 1.25

The following chart contains information about the tasks in a project.
Based on the chart, what is the cost variance (CV) for
Task 6?
•A. -2,000
•B. 0
•C. 1,000
•D. 2,000
Ans : D
CV = EV- AC
= 12,000 – 10,000
= 2,000

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A schedule performance index, SPI, of 0.75 means:
A-) Project is over budget.
B-) Project is ahead of schedule.
C-) Project is progressing at 75% of the rate originally planned
D-) Project is progressing at 25% of the rate originally planned
Answer is C, project is progressing at 75% of the rate originally planned. A, is
irrelevant because SPI is a schedule performance index. We cannot derive
any conclusion about budget performance of the project with this index. B, is
not correct because SPI is less than one, therefore, the project is behind
schedule. And D, says that you have completed 25% of the work that you
have originally planned, so it’s not correct. The correct answer here is C,
because SPI 0.75 means, you have completed 75% of your work that you
have originally planned.
India

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1. S Curve - it is used in project management as a tool for monitoring the
growth, progress and performance of ongoing projects by tracking project
progress visually over time, and form a historical record of what has
happened to date. Analyses of S-curves allow project managers to quickly
identify project growth, slippage, and potential problems that could adversely
impact the project if no remedial action is taken.
2. The graph describes the typical growth of earned value during the course of the
project.
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45
S-Curve shows cumulative costs expended over time for the duration of the project:
‘S’ shape - flatter at the start, steeper in the middle, and flattening off again towards
the end.
This shape is typical for most projects as they start slowly, ramp up during the main
execution phase, and then wind down again towards the project’s completion, as
work runs out.
Costs versus Time S-curve
India
The cost
performance
baseline is
typically
displayed in
the form of:

46
India

Funding Limit Reconciliation. A technique that compares
the funding available in each time period (say a month) to the
planned expenditure in that time period to ensure that the planned
expenditure is within the available funding. It is used in the
Determine Budget process.
It involves the comparison and adjustment of the funding limits and
the estimated costs by refining the scope and schedule of the project
activities. It is important to take note that the expenditure of
the funds should be reconciled with the funding limits of the
project.
Funding Limit Reconciliation

48
Cost Baseline .. Output
Time
CumulativeValues
Cost Baseline (CBL)
Expenditures
Funding
Requirements
Management Reserve
S - Curve
Project Budget
BAC
India
EAC

While looking at the project cost baseline graph shown below, a project manager sees that the stair-step line’s last point
is higher than the estimate at completion (EAC). What does this relationship mean for the project?
The project is running over budget
The management reserve is too large
Total funding for the project exceeds the project's anticipated needs
The project is behind schedule

Ans : C
Total funding for the project exceeds the project's anticipated needs
Explanation: The project cost baseline graph displays a time-phased view of the cost baseline along
with funding requirements and expenditures. The stair-stepped line on the graph represents the funding
requirements, which includes the cost baseline and the management reserve. The project budget is
represented by the last point of the stair-step line. The question states that EAC (estimate at
completion) is less than the project budget (the top stair step). Therefore, in this scenario, total funding
for the project exceeds the project's anticipated needs.

The Cost Baseline has all the Following Characteristics Except
A It is Approved Version of the Time-Phased Project Budget, excluding any management
reserves, and is used as a basis for Comparison with actual results.
B. It shows the Actual Cost Expenditures throughout the Project Life Cycle.
C. It is Developed as a Summation of the Approved Budget for the Different Scheduled
Activities
D. It is Typically Displayed in the Form of an S-Curve
Ans : B

As part of a mid-project evaluation, your project sponsor has asked you to provide a forecast of total
project cost. You should calculate the forecast using which of the following methods?
•A. BAC
•B. EAC
•C. ETC
•D. WBS
Ans : B
Cost baseline is an output of which of the following processes?
•A. Estimate Activity Resources
•B. Estimate Costs
•C. Determine Budget
•D. Control Costs
Ans : C

53
Question: You are an influential project manager in your
organization. You often use your influence on team
members to help guide the factors that can change the
cost of the project. Which process are you using to do
the same?
A: Negotiate Costs
B: Control Costs
C: Estimate Costs
D: Determine Budget
Ans : B: Control Costs
India

Question - 26
You are in charge of a software project and you are almost 40% complete. The project stakeholders want a
[performance report to date. You had planned to use Earned Value Management methodology. You come up
with the following numbers: EV = 100 AC = 300 PV = 150 BAC = 600 You and your team have faced numerous
issues till now . However you choose to ignore the current work performance and decide to go with what was
originally planned. Based on this information what would be the EAC for the project ?
A. 800
B. 200
C. 600
D. 1800
A is the correct answer.
The correct answer is A - this is because here it is stated that whatever issues or lack of them experienced in the
project were ignored - so here the past performance is not considered while the planned values are
considered.So the formula : EAC = AC + ( BAC - EV ) = 300 + ( 600 - 100 ) EAC = 800
India
54

55
Which of the following processes is the process of aggregating the estimated
costs of individual activities or work packages to establish an authorized cost
baseline?
•1. Estimate costs
•2. Control costs
•3. Determine budget
•4. Cost management
Ans : 3. Determine budget
What are the three points considered in three-point estimating technique?
•1. Historical, Actual, Planned
•2. Optimistic, Pessimistic, Actual
•3. Planned, Actual, Approximate
•4. Optimistic, Pessimistic, Most likely
•Ans : 4. Optimistic, Pessimistic, Most likely
India

56
If CPI is greater than 1 and SPI is less than 1, then what is the status of the project?
•1. Project is under the budget and behind the schedule
•2. Project will be over-budget
•3. Project will not meet projected deadline
•4. Project is over budget and ahead of schedule
•Ans : 1. Project is under the budget and behind the schedule
You are working as a project manager on a project. The project is now 50% completed. You
used earned value technique to check overall health of the project. Based on the calculations,
you realize that the initial project pan is no longer valid. Still, you need to provide Estimate At
Completion. In such situation, which formula will you use to calculate EAC?
•1. EAC = AC + BAC - EV
•2. EAC = AC + bottom-up estimate
•3. EAC = BAC / CPI
•4. EAC = AC + [(BAC - EV) / (CPI * SPI)]
•Ans : 2. EAC = AC + bottom-up estimate
India

57
If earned value=100, planned value=110 and actual cost=120, the cost
performance index is:
•1. 20
•2. -20
•3. 0.833
•4. 1.2
•Ans : 3. 0.833
While performing calculations of a project using earned value technique, the
manager identified that earned value is equal to actual cost. What does it mean?
•1. Project is under budget and on schedule
•2. There is no cost variance
•3. There is no schedule variance
•4. Cost performance index is 0
•Ans : 2. There is no cost variance
India

58
Analogous estimating is a :
A. ”Bottom-up” estimating technique.
B. ”Drop-down” estimating technique.
C. more costly and more accurately estimating technique.
D. technique used when you have no subject matter experts available.
Ans : B
Cost Estimates:
A. are usually presented at a detailed level to Top Mgt only.
B. can be presented in summary of detail.
C. are summarized for senior management.
D. are provided in detail for senior management.
Ans : B
India

59
The authorized budget assigned to scheduled work is called as:
•1. Planned value
•2. Earned value
•3. Budget at Completion
•4. None of the above
•Ans : 1. Planned value
Which of the following is not a technique of Control Costs process?
•1. Reserve analysis
•2. To-complete performance index
•3. Expert judgment
•4. Performance reviews
•Ans : 3. Expert judgment
India

60
Which of the following is not a part of cost baseline?
•1. Contingency reserves
•2. Work package costs
•3. Contingency reserves and management reserves
•4. Management reserves
•Ans : 4. Management reserves
Which of the following is the correct formula for calculating schedule variance?
•1. SV = EV – AC
•2. SV = EV – PV
•3. SV = EV / AC
•4. SV = EV / PV
•Ans : 2. SV = EV – PV
India

61
You are a sponsor on a website development project. Your project manager has
reached out to you stating that the TCPI is greater than 1. What is the BEST thing
you can do now?
A: Relax and do nothing as you're under budget.
B: Manage costs aggressively.
C: Create a new schedule as TCPI greater than 1 is not good.
D: Create a new budget as TCPI greater than 1 is not good.
Ans : B
India

62
If the CPI of a project is 1.15 and the SPI is 0.7, which of the following
techniques would probably help you bring the SPI closer to 1?
A) Rolling Wave Planning
B) Reserve Analysis
C) Crashing
D) Funding Limit Reconciliation
Since the CPI is over one and SPI is less than one, it means that the project is
currently not over budget, but is behind schedule. Rolling Wave planning does not
impact the schedule. It is a type of planning used when there isn’t enough clarity to
plan for the complete project. Options B and D are techniques used in the Determine
Budget process. Option C, Crashing, is used to accelerate project progress at the
expense of increased cost and risk..
India

63
The amount of work you have actually completed is equivalent to $10,000
and amount you have actually spent is $12,000. What does this mean?
A: The project is under budget.
B: The project is over budget.
C: The project is ahead of schedule.
D: The project is behind schedule.
Ans : B
India

64
Suppose you have a budgeted cost of a project at $900,000. The project is to be
completed in 9 months. After a month, you have completed 10% of the project at a total
expense of $100,000. The planned completion should have been 15%. At the current
progress rate, how much more money is required to complete the project?
A) $ 800,000
B) $ 900,000
C) $ 1,000,000
D) $ 1,100,000
The question is indirectly asking you to compute the Estimate to Complete (ETC). From the
scenario, you can extract the following project performance parameters:
BAC = $900,000
AC = $100,000
The project performance in terms of Planned Value and Earned Value can then be computed as follows:
Planned Value = Planned Completion (%) * BAC = 15% * $900,000 = $135,000
Earned Value = Actual Completion (%) * BAC = 10% * $900,000 = $90,000
India

65
For you project, you have hired a freelancer to develop a website in
.NET. After a month, you decide that the freelancer isn’t doing a
good job and reach out to another freelancer. The second freelancer
convinces you that your website project would be better off based on
the Java platform. The costs associated with the .NET developer
are:
A) Variable
B) Direct
C) Indirect
D) Sunk
Since you have been convinced to go with the Java platform, all of the
.NET related code cannot be used. Therefore, this is an example of
sunk costs
India

66
If you use the Funding Limit Reconciliation technique while performing
the Determine Budget process, which of the following will NOT change?
A) Activity Cost Estimates
B) Schedule
C) Resources required during an Iteration
D) Planned scope to be delivered in a Sprint
Funding Limit Reconciliation can lead to changes in schedule and
resources required. As schedule is being changed so can the expected
scope in an Iteration. Activity Cost Estimates are NOT based on
Funding Limits. Therefore, Option A is the only valid answer.
India

67
What is the S-curve in project management?
A. A graph that is generated if a normal curve is integrated.
B. A graph that is to be integrated to generate a normal curve.
C. A metaphoric description of the short term uncertainties that
are present in every project.
D. The graph that describes the typical growth of earned value
during the course of the project.
Ans : D
India

68
Suppose you are managing a software development project.
The project is expected to be completed in 8 months at a cost of
$10000 per month. After 2 months, you realize that the project
is 30% completed at a cost of $40,000. What is the Earned
Value (EV) and the Cost Variance (CV)?
A) EV = $24,000; CV= ($16,000)
B) EV = ($20,000); CV= $16,000
C) EV = $16,000; CV= ($4,000)
D) EV = ($16,000) ; CV= $4,000
India

69
At present, your project has an SPI of 0.52 and a CPI of 1.4.
Is it good or bad? Which of the following BEST describes your
project?
A: Your project is ahead of schedule and under budget.
B: Your project is behind schedule and over budget.
C: Your project is behind schedule and under budget.
D: Your project is ahead of schedule and over budget.
Ans : C
India

70
To protect your project from cost overruns, which of the following can you do
in the planning phase of the project?
A) Pad high risk activities with extra cost buffer
B) Provide extra time for each activity in the schedule
C) Monitor each activity closely
D) Apply Earned Value Forecasting Formulae, such EAC and ETC
This question assesses whether you know how to implement
Reserve Analysis in a project. Option B does not protect
against cost overrun, rather it is a schedule buffer. Option C is
not a planning activity. Option D is not a planning activity.
Therefore, Option A is the only valid answer.
India

71
When a product is recalled, the ____ increases.
A) Activity Cost
B) Cost of Quality
C) Product Quality
D) Product Maintenance Cost
The question is related to Cost of Quality (CoQ).
India

72
You are the project manager of a project. You want to use a
cost estimating tool. One of your PMP® certified colleagues
points you towards the parametric estimating technique.
Which of the following is an example of a parametric estimate?
A: Dollar per phase
B: Top Down estimating
C: Bottom-up estimating
D: Optimistic Time is 12 days and Most Likely Time is 8
days
Ans : A
India

73
During a project, earned value analysis is performed,
resulting in the following numbers:EV: 523,000; PV:
623,000; AC: 643,000
Which results are correct?
a) CV: +120,000; SV: +100,000
b) CV: +100,000; SV: +120,000
c) CV: -100,000; SV: -120,000
d) CV: -120,000; SV: -100,000
Ans : d)
India

74
You found the following earned value analysis
information for a project that was recently closed-
out:
SPI = 0.7, CPI = 1.0
a) The project has been cancelled while it was
executed. At that time the project was behind
schedule and on budget
b) The project's deliverables have all been finished. The project
came in behind schedule but on budget.
c) The project's deliverables have all been finished. The project
came in ahead of schedule but on budget.
d) The project's deliverables have all been finished. The project
came in on schedule but over budget.
Ans : A
India

75
You are assigned as the project manager to a project
which had a one-time cost variance in the past
caused by unexpected rework which has meanwhile
been finished.
You perform earned value analysis and get the
following results:
EV: 250,000;
PV: 200,000;
AC 275,000,
BAC is 500,000.
What is right?
a) EAC = 550,000
b) EAC = 525,000
c) EAC = 500,000
d) EAC = 425,000
Ans : b SN Panigrahi, Essenpee Business Solutions,
India

76
For a project, the following earned value data have been assessed:
AC: $ 4,000,000
CV: $ -500,000
SPI: 1.12
BaC: $ 9,650,000
What is the earned value of the project?
a) $3,000,000
b) $3,500,000
c) $4,480,000
d) $5,650,000
Ans : b
India

77
Your project exceeded costs in the past caused by an
underestimation of resource costs in the cost baseline:
PV: $1,200,000,
EV: $1,000,000,
AC: $1,200,000
You expect the underestimation to influence the future as much as
it did in the past.
If the value of the remaining work (BAC – EV) is at $1,000,000,
what should be your new EAC (estimate at completion)?
a) $1,800,000
b) $2,000,000
c) $2,200,000
d) $2,400,000
Ans : d
“EAC forecast for ETC work considering both SPI and CPI factors”SN Panigrahi, Essenpee Business Solutions,
India

78
The project is working into 3/4 of project duration and the
final component is to be built to improve the accuracy of
the system. The project manager is updating the cost of
the whole system. What is the degree of accuracy of the
estimate?
1. Preliminary Estimate
2. Rough Order of Magnitude Estimate
3. Budget Estimate
4. Definitive Estimate
Ans : D - Definitive Estimate
India

79
Which statement describes best the meaning of the term cost baseline?
a) A cost baseline is always created by translating time-phased cost information
into cost data on activity or work-package level.
b) A cost baseline is an approved time-phased budget that will be used to measure
and monitor cost performance on the project.
c) Data to draw a cost baseline can be easily generated and updated as necessary
from information related to actual project cost.
d) A cost baseline is usually displayed in the form of an inverse S-curve drawn from
the beginning of the project until data date.
Ans : b
India

80
You monitored figures on cost and planned/earned value for
each individual project week until the data date at the end of the
sixth week. What is the status of this project at this date?
Project week Actual costs Earned value Planned value
1 $65,000 $61,000 $67,000
2 $85,000 $79,000 $89,000
3 $100,000 $102,000 $110,000
4 $125,000 $124,000 $121,000
5 $135,000 $133,000 $139,000
6 $125,000 $120,000 $131,000
a) The project is ahead of schedule and over budget.
b) The project is ahead of schedule and under budget.
c) The project is behind schedule and over budget.
d) The project is behind schedule and under budget.
India

81
Project week Actual costs Earned value Planned value
1 $65,000 $61,000 $67,000
2 $85,000 $79,000 $89,000
3 $100,000 $102,000 $110,000
4 $125,000 $124,000 $121,000
5 $135,000 $133,000 $139,000
6 $125,000 $120,000 $131,000
At data date $635,000 $619,000 $657,000
SV = EV – PV = -$38,000 (behind schedule)
CV = EV – AC = -$16,000 (over budget)
Answer: c
India

82
For a project, the following earned value data have been assessed:
AC: $ 4,000,000
CV: $ -500,000
SPI: 1.12
BAC: $ 9,650,000
What is the earned value of the project?
a) $3,000,000
b) $3,500,000
c) $4,480,000
d) $5,650,000
Ans : b
CV = EV – AC => EV = CV+AC
= $ -500,000 + $ 4,000,000
= $3,500,000
India

83
The cost performance baseline is a time phased funding of your
project and you measure, monitor, and compare your project
performance against it. In which of the following forms do you
usually represent it?
(a)P-curve
(b)Pie curve
(c)S-curve
(d)Symmetric curve
Ans : C
India

84
In cost monitoring, the s-curve depicts the relation
between:
A. Schedule completion and time.
B. Cumulative value and time.
C. Schedule completion and value resources.
D. resources and time
Ans : B
In order to produce a cost base line, the project manager
requires
A. Work packages, work breakdown structure and project
schedule
B. cost estimates, work breakdown structure and the project
schedule.
C. cost estimates, work packages `and project schedule.
D. cost estimates, work packages and work breakdown structure.
Ans : B
India

85
Which of the following is an indirect cost?
A. Units of Production.
B. Lights in the Project War Room.
C. Tax cost of Salary of project developers.
D. Paper purchased by the project.
Ans : A
India

86
An order of magnitude estimate is not also known as
A. a control estimate.
B. a ball park estimate.
C. a conceptual estimate
D. a preliminary estimate.
Ans : A
When the expected cash flow s –curve is above the cost
performance base line the project manager should
A. investigate the variance to determine if corrective reaction is
required.
B. bring the situation to the attention of senior management for
action.
C. adjust the cost baseline to reflect the actual cost to this point.
D. do nothing since the project is performing above plan
Ans : A
India

87
Cost estimates may also be expressed in hour’s days
etc., as long as
A. it does not result in a misstatement of project cost.
B. the program manager agrees.
C. the unit of measure is consistent within the project.
D. the project manager agrees.
Ans : A
India

88
You are performing earned value technique on your project.
After budget approval, an additional and unexpected cost item
has been identified, which made the project more expensive
some weeks ago.
The item has meanwhile been paid by the project team, and it is
expected that for the remaining duration of the project, costs
will be as budgeted.
In this case, which is the best formula to calculate EaC (Estimate
at Completion)?
a) EaC = BaC – CV
b) EaC = BaC / CPI
c) EaC = AC + BtC / CV
d) You can not compute the EaC.
Ans : a
India

89
Based on the table below, which of these statements is correct?
(a) The project is ahead of schedule
(b) The project is behind schedule
(c) CPI is 0.98
(d) Not sufficient data
Answer : b
Explanation: Since activity A is 100% complete, EV of A = 5,000
Since activity B is 80% complete, EV of B = 0.8 * 15,000 = 12,000
Since activity C is 70% completed, EV of C = 0.7 * 18,000 = 12,600
Now,
EV of the project = 5,000 + 12,000 + 12,600 = 29,600 USD
PV of the project = 5,000 + 10,000 + 15,000 = 30,000
SPI = EV / PV = 29,600 / 30,000 = 0.98
Therefore, the project is behind schedule.
AC = 5,500 + 11,000 + 13,000 = 29,500
CPI = EV / AC = 29,600 / 29,500 = 1.003
India

90
You have been given $100,000 USD to complete the project.
$60,000 USD has been spent, though as per the schedule,
$55,000 USD should have been spent to complete the same
work. What is the Budget at Completion (BAC)?
(a) $55,000 USD
(b) $100,000 USD
(c) $60,000 USD
(d) $105,000 USD
Answer- 20: b
Explanation: BAC is the total budget assigned to your
project.
India

91
The budget of your project is 350,000 USD and you have
spent 200,000 USD. However, upon analyzing the project’s
performance you find that you are over budget and may need
200,000 USD to complete the remaining work. This 200,000
USD is known as:
(a)BAC
(b)ETC
(c)TCPI
(d)EAC
Answer-281: b Explanation: Estimate to Complete (ETC) is the
cost required to complete the remaining work.
Reference: The PMBOK Guide, 6th Edition, Page: 264, 265
India

The total budget of your project is $200,000. Currently, you have completed 30% worth of work.
However, you should have completed 40% worth of work. The amount spent so far is $50,000. As per the
current scenario, it looks like both CPI and SPI will influence the remaining work. Calculate EAC?
A: $190,000
B: $166,666
C: $155,555
D: $205,555
Ans : D

93
Due to an improper cost management plan, you are over budget and
a new estimate is required to complete the project. Management
asks you what the new estimate for the project will be. Which of the
following formulas is not used to find this new estimate?
(a)BAC / CPI
(b)AC + (BAC – PV)
(c)AC + (BAC – EV)
(d)AC + (BAC – EV) / (CPI * SPI)
Answer: b
Explanation: Management is asking you to calculate the estimate at
completion (EAC). All options except EAC = AC + (BAC – PV) are
correct formulas to calculate the EAC in different scenarios.
Reference: The PMBOK Guide, 6th Edition, Page: 263, 264, & 265
India

94
A project has a BAC of $100,000 with a timeline of 100 days.
After 50 days, the project manager finds that 50% of the
project is complete and actual costs are $100,000. What is
the Cost Performance Index (CPI) ?
A: The CPI is 1
B: The CPI is 1.5
C: The CPI is 0
D: The CPI is 0.5
Ans : D
India

95
You are reviewing a chart which looks like an S-Curve during the
execution phase of your project. What kind of chart is this?
(a)Cause and effect diagram
(b)Pareto diagram
(c)Cost baseline
(d)Sensitivity diagram
Ans : C
India

India
96
Which of the following indicates that a project has a CPI of 1.2?
A. PV = 4000, EV = 4800
B. AC = 4000, EV = 4800
C. AC = 4800, EV = 4000
D. PV = 4800, EV = 4000
Ans : B

97
India

98
SN Panigrahi SN Panigrahi, Essenpee Business Solutions,
India

Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 100

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