You are managing an infrastructure project with a fixed budget of $2.5 million. At the end of month 4, your earned value analysis shows: PV = $800,000, EV = $750,000, AC = $825,000. The project is planned for 12 months total. Based on this information, senior management asks you to forecast the final project cost. What is the most appropriate estimate at completion (EAC) to present if you expect current performance to continue?

Question

Accepted Answer

The correct answer is A. When current cost performance is expected to continue for the remainder of the project, the most appropriate EAC formula is BAC/CPI. With CPI = EV/AC = 750,000/825,000 = 0.91, the calculation yields approximately $2,747,253. This formula assumes that past cost efficiency trends will persist. Option B assumes future work will be completed at planned costs, which contradicts the scenario stating current performance will continue. Option C incorporates both cost and schedule variance, which is overly complex when only cost performance continuation is indicated. Option D ignores the performance data entirely—while the budget is fixed, the question asks for a forecast, not the budget constraint. The project is trending over budget, and this forecast helps management understand the variance.

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