Your manufacturing project has a Cost Performance Index (CPI) of 0.85 and a Schedule Performance Index (SPI) of 1.10. The project is 60% complete with six months remaining until the planned completion date. During the monthly steering committee meeting, the CFO expresses concern about the budget overrun and asks whether the project can be completed within the approved budget. What should you present to the steering committee?

Question

Accepted Answer

The correct answer is A. With a CPI of 0.85, the project is significantly over budget (spending $1.18 for every $1.00 of work completed). The most appropriate response is to calculate the Estimate at Completion (EAC) to forecast the total project cost and present viable options to address the overrun. Option A provides the steering committee with the information needed to make an informed decision about project continuation. Option B is inappropriate because good schedule performance (SPI of 1.10) doesn't offset cost overruns—these are independent metrics. Option C incorrectly suggests fast-tracking reduces costs; it typically increases risk and may increase costs. Option D addresses risk management but doesn't directly answer the CFO's question about budget completion. This question tests earned value management understanding and stakeholder communication.

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