PMP Process — Managing Technical Aspects Practice Question

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 + (BAC - EV) / (CPI * SPI)

  Why it's wrong here

  This formula calculates the Estimate at Completion by projecting future performance based on both the Cost Performance Index (CPI) and the Schedule Performance Index (SPI). It assumes that both cost and schedule efficiencies will influence the cost of the remaining work, often implying that schedule delays will directly impact future costs. While comprehensive, this approach might overcomplicate the estimate if the primary concern is solely future cost performance based on current cost efficiency, especially when a cost-only projection is requested.

• ✗

  EAC = AC + (BAC - EV)

  Why it's wrong here

  This Estimate at Completion (EAC) formula adds the Actual Cost (AC) to the remaining budget (Budget at Completion minus Earned Value, BAC - EV). It fundamentally assumes that all future work will be completed at the originally planned rate, effectively ignoring any cost performance variances (CPI) experienced to date. This optimistic projection is only valid if current cost inefficiencies are expected to be fully corrected, and future work will perfectly adhere to the budget, which is rarely a realistic assumption in projects experiencing deviations.

• ✗

  EAC = AC + BAC - EV

  Why it's wrong here

  This formula, mathematically identical to EAC = AC + (BAC - EV), calculates the Estimate at Completion by simply adding the Actual Cost (AC) to the remaining budget (BAC - EV). It is a simplistic sum that completely fails to incorporate any performance data from the project's actual execution, such as the Cost Performance Index (CPI). This makes it an unreliable estimate for future costs if the project is not performing exactly to plan, as it entirely overlooks earned value principles and past performance trends.

• ✓

  EAC = BAC / CPI

  Why this is correct

  This formula, Estimate at Completion (EAC) = Budget at Completion (BAC) / Cost Performance Index (CPI), assumes that the project's current cumulative cost performance (CPI) is a reliable indicator of future cost performance. It projects the total cost by extrapolating the current efficiency rate across the entire project, effectively estimating that the entire project will be completed at the same cost efficiency experienced so far. This is a common and appropriate method when past cost performance is expected to continue and is particularly useful when a sponsor requests a cost-only projection based on current efficiency.