Project Management Professional (PMP) Exam Practice – Question1412

You are using earned value progress reporting for your current project in an effort to teach your software developers the benefits of earned value. You plan to display project results on the cafeteria bulletin board so that the team knows how the project is
progressing.

PV = $2,200
EV = $2,000
AC = $2,500
BAC = $10,000

What is the EAC for this project, and what does it represent?


A. $12,500; the revised estimate for total project cost (based on performance thus far)
B. $10,000; the revised estimate for total project cost (based on performance thus far)
C. $12,500; the original project budget
D. $10,000; the original project budget

Correct Answer: A

Explanation:

Explanation:
EAC is calculated as BAC/CPI (in this case, $10,000/0.80). It is now known that the project will cost more than the original estimate of $10,000. The project has been getting only 80 cents worth of work done for every dollar spent (CPI), and this information has
been used to forecast total project costs. This approach assumes that performance for the remainder of the project will also be based on a CPI of 0.80.