The answer is EAC = BAC / CPI. This is the correct formula because the question specifies that the cost overrun trend—consistently 15% above budget—is expected to continue, making it a classic "typical" estimate at completion scenario where current cost performance is projected to persist. In this case, the Cost Performance Index (CPI) is 0.87 (EV $100,000 divided by AC $115,000), and dividing the Budget at Completion (BAC) by this CPI gives the forecasted total cost assuming the same efficiency rate. On the PMP exam, this tests your ability to distinguish between "typical" and "atypical" variances; a common trap is using EAC = AC + (BAC – EV) for atypical situations when the trend is actually ongoing. A reliable memory tip is to remember that when the cost trend continues, you "divide by CPI"—think of it as the cost efficiency staying the same, so the formula mirrors the past performance into the future.
PMP Process — Managing Technical Aspects Practice Question
This PMP practice question tests your understanding of process — managing technical aspects. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A project manager is managing a construction project and notices that the actual cost for concrete work is consistently 15% above budget. The earned value (EV) is $100,000, and the actual cost (AC) is $115,000. The project manager wants to estimate the cost at completion (EAC) if this trend continues. Which formula should the project manager use?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
EAC = BAC / CPI
Option C is correct because the question states the cost overrun trend (15% above budget) is expected to continue. The formula EAC = BAC / CPI is the appropriate 'typical' estimate at completion when current cost performance is projected to persist. With EV = $100,000 and AC = $115,000, the CPI is 0.87, and dividing the BAC by this CPI yields the forecasted total cost assuming the same efficiency.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✗
EAC = AC + Bottom-up ETC
Why it's wrong here
This is used when the original estimate is no longer valid and a new estimate is needed for remaining work.
✗
EAC = AC + (BAC - EV)
Why it's wrong here
This formula is used when the remaining work will be done at the planned rate, not when the cost variance is expected to continue.
✓
EAC = BAC / CPI
Why this is correct
This formula assumes the current cost performance will continue, which is appropriate given the consistent 15% overrun.
Related concept
Read the scenario before looking for a memorised answer.
✗
EAC = BAC / (CPI * SPI)
Why it's wrong here
This formula considers both cost and schedule performance, but the question only indicates a cost trend, not schedule.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse the 'typical' (EAC = BAC / CPI) and 'atypical' (EAC = AC + (BAC - EV)) formulas, selecting Option B when the question explicitly states the trend will continue, which requires the typical formula.
Detailed technical explanation
How to think about this question
The CPI (Cost Performance Index) is calculated as EV / AC, and when the trend is typical, the EAC formula assumes the cumulative CPI will remain constant for the remainder of the project. In practice, this formula is used when the project manager believes the root causes of the cost variance (e.g., material price increases, labor inefficiencies) are systemic and will not change. The BAC (Budget at Completion) must be known; if not, the project manager would need to derive it from the original budget baseline.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A practitioner preparing for the PMP exam encounters this exact type of scenario on the job. The correct answer here is not the most general option — it is the best answer for the specific constraint described. Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option. Real exam questions reward reading the full scenario before eliminating options, because the constraint defines which answer fits.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this PMP question in full detail.
Process — Managing Technical Aspects — This question tests Process — Managing Technical Aspects — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: EAC = BAC / CPI — Option C is correct because the question states the cost overrun trend (15% above budget) is expected to continue. The formula EAC = BAC / CPI is the appropriate 'typical' estimate at completion when current cost performance is projected to persist. With EV = $100,000 and AC = $115,000, the CPI is 0.87, and dividing the BAC by this CPI yields the forecasted total cost assuming the same efficiency.
What should I do if I get this PMP question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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