You are managing a construction project with a fixed budget of $2.5 million and a 14-month timeline. During month 6, you conduct an earned value analysis and discover that the Cost Performance Index (CPI) is 0.85 and the Schedule Performance Index (SPI) is 0.92. The project sponsor asks you to forecast the final project cost and determine what actions are needed. Using the current performance trends, what is the most appropriate estimate at completion (EAC) if you believe current variances are atypical and future work will be performed at the planned rate?

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Accepted Answer

The correct answer is A. When variances are atypical and not expected to continue, the appropriate EAC formula is AC + (BAC - EV), which takes actual costs incurred and adds the original budget for remaining work. This assumes future work will proceed as planned. Option B (BAC/CPI) is the main distractor because it's commonly used, but it assumes current cost inefficiencies will continue, which contradicts the scenario statement that variances are atypical. Option C incorporates both indices and assumes both trends continue, while Option D is most accurate but time-intensive and unnecessary if variances are truly atypical.

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