Project Monitoring and Controlling

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These questions are derived from the Self Test Software Practice Test for the Project Management Institute exam #PMP3ED – Project Management Professional Third Edition

Objective : Project Monitoring and Controlling

SubObjective : Cost Control

Single Answer, Multiple Choice

You are managing a project that was originally scheduled to take 12 months to complete. The original budget was $486,000, or $40,500 each month. At the end of the month, you are evaluating progress. You have completed 40 percent of the work and have $90,000 remaining of your budget. What is your EAC?

1. $194,400
2. $396,000
3. $595,836.73
4. $991,836.73

Answer:

D. $991,836.73

Tutorial:

Your Estimate at Completion (EAC) is $991,836.73. To arrive at the EAC, you perform the following calculations:

BAC = $486,000

AC = $486,000 – $90,000 = $396,000

EV = BAC x percent complete = $486,000 x .40 = $194,400

CPI = EV / AC = $194,400 / $396,000 = .49

Then, you can use the following formula to calculate the EAC:

EAC = BAC / CPI = $486,000 / .49 = $991836.73

All of the other options are incorrect because they do not reflect the correct EAC value.

Reference:

1. A Guide to the Project Management Body of Knowledge – PMBOK Guide 3rd Edition – Project Cost Management – 7.3.2 Cost Control: Tools and Techniques

2. A Guide to the Project Management Body of Knowledge – PMBOK Guide 3rd Edition – Glossary – Estimate at Completion (EAC)

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