PK0-005 Project Life Cycle Practice Question
A project has a budget at completion (BAC) of $200,000. After two months, the earned value (EV) is $80,000 and the actual cost (AC) is $90,000. The CPI is 0.89. Which THREE statements are correct regarding cost performance and forecasting?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
The estimate at completion (EAC) is approximately $224,719.
CPI = EV/AC = 80/90 = 0.89. The project is over budget. EAC = BAC/CPI = 200,000/0.89 ≈ $224,719. VAC = BAC - EAC = 200,000 - 224,719 = -$24,719 (overrun).
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
The estimate at completion (EAC) is approximately $224,719.
Why this is correct
Correct. EAC = BAC/CPI ≈ $224,719.
- ✗
The to-complete performance index (TCPI) based on BAC is 1.12.
Why it's wrong here
TCPI = (BAC - EV) / (BAC - AC) = (200,000-80,000)/(200,000-90,000) = 120,000/110,000 = 1.09, not 1.12.
- ✓
The project is over budget.
Why this is correct
Correct. CPI < 1 means cost overrun.
- ✓
The variance at completion (VAC) is approximately -$24,719.
Why this is correct
Correct. VAC = BAC - EAC = -$24,719 (negative indicates over budget).
- ✗
The project is under budget.
Why it's wrong here
CPI < 1 indicates over budget.
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