You are managing a large infrastructure project with a 24-month timeline and a fixed budget of $15 million. At the end of month 12, you conduct an earned value analysis and find: PV = $7.5M, EV = $6.8M, AC = $7.9M. The sponsor is concerned about cost overruns and asks whether the project can be completed within the original budget. Your team estimates that current performance trends will continue. What is the most accurate estimate at completion (EAC) you should report to the sponsor?

Question

Accepted Answer

The correct answer is A. Option A is correct because when current performance trends are expected to continue, EAC = BAC / CPI provides the most accurate forecast. With CPI = EV/AC = 6.8/7.9 = 0.86, the calculation is 15M / 0.86 = $17.43M. This formula assumes that past cost efficiency (or inefficiency) will persist throughout the project. Option D is the main distractor because it incorporates both CPI and SPI, which is only appropriate when schedule delays directly cause additional costs or when you believe both indices will influence future performance. However, the scenario states that 'current performance trends will continue' without indicating that schedule performance impacts cost, making the simpler CPI-based formula more appropriate. Options B and C are incorrect because B assumes perfect cost performance going forward (unrealistic given the trend), and C confuses contractual obligations with forecasting reality.

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