Advanced Formula

EAC – ETC – VAC – TCPI

Estimate at completion (EAC) is a periodic evaluation of:
A. The cost of work completed.
B. The value of work performed.
C. The anticipated total cost at project completion.
D. What it will cost to finish the project.
Answer C
Explanation
When you look at earned value, many of the terms have similar definitions. This could get you into trouble.

EAC means the estimate at completion.

What it will cost to finish the project is the definition of ETC, or estimate to complete.
In your project, you have reasons to believe that the current variances occurred because of extraneous factors and you do not expect similar
variances to occur in future. What should be the estimate at completion (EAC) for your project? BAC = $300,000; AC = $100,000; EV = $150,000;
CPI = 1.5
A. $250,000
B. $220,000
C. $280,000
D. $200,000
Answer: A
Justification:
Since current variances are atypical, Estimate at Completion
EAC = AC + BAC - EV
EAC = $100,000 + $300,000 - $150,000
EAC = $250,000
In your project, there have been several changes in the cost and schedule estimates, and the original estimating assumptions are no longer valid.
Calculate the estimate at completion (EAC) for your project based on the following data?
BAC = $300,000, AC = $100,000, EV = $150,000, CPI = 1.2, ETC = $120,000
A. $250,000
B. $220,000
C. $280,000
D. $300,000
Answer: B
Justification:
Since original estimating assumptions are no longer valid, EAC = AC + ETC = $100,000 + $120,000 = $220,000
As a project manager, you have selected Project A that has an initial budget of $1,000 out of which $800 has already been spent. To complete
this project, you need an additional $500. Project B will require $1,200 only for completion. Which project would you prefer to manage and what
will be its ETC?
A. Project A, ETC of $800
B. Project A, ETC of $1,000
C. Project A, ETC of $500
D. Project B, ETC of $1,200
Answer: C
Justification:
Since $800 is the sunk cost, we ignore it for calculating ETC of Project A, which means that ETC (Estimate to Complete) for Project A will be $500,
whereas ETC for Project B is higher at $1,200. So, it is beneficial to select Project A.
You have been managing a project to build a new Baseball complex and are three months into the construction. You notice some variances and
would like to forecast a new EAC. You hope to get approval to adjust the Cost Performance Baseline by submitting the new EAC and justification
through the Integrated Change Control process. Calculate the To-complete performance index of your project, based on this new EAC, when the
actual cost of your project is $200,000, cost variance of your project is $25,000 and the budget at completion of your project is $350,000.
A. 1.125
B. -1.4
C. 1
D. -1
Answer:
Justification:
CV = EV - AC
EV = CV + AC
= $25,000 + $200,000
= $225,000

CPI = EV / AC
= $225,000 / $200,000
= 1.125

EAC = BAC / CPI

= $350,000 / 1.125
= $311,111.11

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

= ($350,000 - $225,000) / ($311,111.11 - $200,000)
= $125,000 / $111,111
= 1.125
You are the project manager for a project where your team must travel to the work site by foot. The walk is 100 miles, and is the first task on the
project schedule. The total amount budgeted for this task is $4,000. If the team is scheduled to walk 20 miles per day, they should reach the
work site at the end of day 5. At the end of the second day, you realize the team has only traveled 30 miles, and you have spent $2,000. Based
on this, what is the SPI for your project, and the projected TCPI
A. 0.8, 1.4
B. 0.75, 1.4
C. 0.75, 1.2
D. Cannot be determined with the given information
Answer: B
Justification:
Given:
BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)

SPI = EV/PV = $1,200 / $1,600 = 0.75 (or 30 miles / 40 miles = 0.75)

TCPI = (BAC – EV) / (BAC – AC) = ($4,000-$1,200) / ($4,000-2,000) = $2,800 / $2,000 = 1.4
For your project, find the To-complete performance index (TCPI) based on the given data:
Budget at completion of the project = $700,000
Cost variance of the project = $25,000
Earned value of the project = $200,000
Estimate to Complete (ETC) has now been revised to $425,000

A. 0.9
B. 1.176
C. 1.5
D. -1.5
Answer:
Justification:
CV = EV - AC
AC = EV - CV = $200,000 - $25,000 = $175,000

EAC = AC + ETC = $175000 + $425000 = $600,000

To-complete performance index (TCPI)

= (BAC - EV) / (EAC - AC)
= ($700,000 - $200,000) / ($600,000 - $175,000)
= $500,000 / $425000
= 1.176
To-complete performance index (TCPI) is represented by which of the following?
A. (BAC - EV)/(BAC - AC)
B. A measure of the value of work completed compared to the actual cost or progress
C. AC + (BAC - EV)
D. A measure of progress achieved compared to progress planned
ANSWER: A
FEEDBACK: The value of work completed relates to the cost performance index. A measure of progress achieved relates to the schedule
performance index. AC + (BAC - EV) is a formula for EAC. (BAC - EV)/(BAC - AC) is the formula for TCPI and is therefore the correct response. This
formula divides the work remaining to be done by the money remaining to do it.
Calculating estimate to complete (ETC) is done in:
A. Project initiating.
B. Project planning.
C. Project monitoring and controlling.
D. Project executing.
ANSWER: C
FEEDBACK: Calculating estimate to complete is done in project monitoring and controlling.
One common way to compute estimate at completion (EAC) is to take the budget at completion (BAC) and:
A. Divide by SPI.
B. Multiply by CPI.
C. Divide by cumulative CPI.
D. Multiply by SPI.
ANSWER: C
FEEDBACK: This formula for EAC is used if no variances from the BAC have occurred or you will continue at the same rate of spending (as calculated in your
cumulative CPI). You have to remember the formula to get the answer correct.
You are working on a 12 month assignment to build a website with 4,000 pages for $1,000,000. You are supposed to spend $250,000 every 3 months. After 6
months, you determine that only $400,000 of work is completed and cost incurred is $800,000. What is the ETC?
A. $2,000,000
B. $1,500,000
C. $1,000,000
D. $1,200,000
ANSWER: D
FEEDBACK: The default value of EAC (assuming current variances are typical) is calculated as below:
CPI = EV/AC
CPI = $400,000 / $800,000
CPI = 0.5
EAC = BAC/CPI
EAC = $1,000,000/0.5
EAC = $2,000,000
So, ETC = EAC – AC = $2,000,000 – $800,000 = $1,200,000
While walking down the hallway, you meet your project sponsor who wants to know the status and percent complete of your project. What would be the
percent complete in your project from the following data?
Earned Value of the project = $3,000, Budget at completion of the project = $5,000, Cost performance of the project = 1.2
A. 71%
B. 60%
C. 71.4%
D. 60.3%
ANSWER: B
FEEDBACK: Percent Complete = (EV/BAC)100 = 3000/5000 x 100 = 60%
As a project manager, you are required to produce project performance reports on a regular basis, your project`s budget at completion is $750,000, planned
value is $100,000, schedule variance is $30,000, and cost variance is $50,000. What is the percent complete and estimate at completion in your project?
A. 18.00%, $500,000
B. 17.33%, $461,538
C. 17.80%, $437,500
D. 18.00%, $437,500
ANSWER: B
FEEDBACK: SV = EV – PV. EV = SV + PV = $30,000 + $100,000 = $130,000. CV = EV – AC. AC = EV- CV = $130,000 – $50,000 = $80,000.
CPI
=$130,000 / $80,000
=1.625
Percent Complete
= (EV/BAC)100
= $130,000 / $750,000 x 100
= 17.33%
Estimate at Complete (EAC)
= BAC/CPI
= $750,000/1.625
= $461,538
The actual cost of your project is $200,000, budget at completion is $325,000, and the cost variance is -$25,000. From the data above calculate the To-complete
performance index of your project, given that, senior management did not agree to revise the estimate at completion based on current performance. AC =
$200,000, BAC = $325,000, CV = -$25,000
A. 0.7
B. 1.2
C. 0.8
D. 1.0
ANSWER: B
FEEDBACK: CV = EV - AC
EV = AC + CV = $200,000 + (-$25,000) = $175,000
CPI = EV/AC = $175,000/$200,000 = 0.875
To-complete performance index (TCPI)
= (BAC - EV) / (BAC - AC)
= ($325,000 - $175,000) / ($325,000 - $200,000)
= $150,000 / $125,000 = 1.2
For your project, find the To-complete performance index (TCPI) based on the given data: Budget at completion of the project = $700,000, Cost variance of the
project = $25,000, Earned value of the project = $200,000, Estimate to Complete has now been revised to $425,000
A. 0.9
B. 1.176
C. 1.5
D. -1.5
ANSWER: B
FEEDBACK: CV = EV - AC
AC = EV - CV = $200,000 - $25,000 = $175,000
EAC = AC + ETC = $175000 + $425000 = $600,000
To-complete performance index (TCPI)
= (BAC - EV) / (EAC - AC)
= ($700,000 - $200,000) / ($600,000 - $175,000)
= $500,000 / $425000
= 1.176
Estimate at completion (EAC) is a periodic evaluation of:
A. The cost of work completed.
B. The value of work performed.
C. The anticipated total cost at project completion.
D. What it will cost to finish the project.
ANSWER: C
FEEDBACK: when you look at earned value, many of the terms have similar definitions. This could get you into trouble. EAC means the estimate at completion.
What it will cost to finish the project is the definition of ETC, or estimate to complete.