PMP Process — Managing Technical Aspects Practice Question
Your IT infrastructure project is running 15% over budget at the midpoint. After analyzing the variance, you find that the cost overrun is due to a one-time increase in licensing fees that will not recur. The project is on schedule. What is the BEST estimate for the Estimate at Completion (EAC)?
⚠ Common exam trap
A common mix-up: candidates default to the typical variance formula (EAC = BAC / CPI) without recognizing that the question explicitly states the cost overrun is due to a one-time event that will not recur, making the atypical formula the correct choice.
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
✓
EAC = AC + (BAC - EV)
The cost overrun is due to a one-time increase in licensing fees that will not recur, meaning the remaining work will be performed at the original budgeted rate. This scenario calls for the EAC formula that adds the actual costs incurred to the remaining budget (BAC - EV), which assumes future cost performance will match the planned rate. This is the 'atypical variance' formula, as the cause of the variance is not expected to continue.
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 = BAC / CPI
Why it's wrong here
This formula assumes that the project's current cost performance index (CPI) is a reliable indicator of future performance and that all remaining work will be completed at this same efficiency rate. It projects the total cost by scaling the entire budget by the observed cost efficiency. However, if the cost variance is known to be atypical or a one-time event, this formula would incorrectly extrapolate the past inefficiency across all future work, leading to an inflated and inaccurate Estimate at Completion.
- ✗
EAC = AC + [(BAC - EV) / (CPI * SPI)]
Why it's wrong here
This formula is a more complex projection that considers both cost and schedule performance indices (CPI and SPI) to forecast the cost of the remaining work. It assumes that both past cost and schedule variances will continue to impact the project's future performance. Given that the schedule is on track and the cost variance is explicitly stated as atypical, applying both CPI and SPI to the remaining work would lead to an inaccurate forecast, as it incorrectly assumes persistent issues in areas not applicable or relevant to the future.
- ✓
EAC = AC + (BAC - EV)
Why this is correct
This formula calculates the Estimate at Completion by adding the Actual Cost (AC) incurred to date to the Budget at Completion (BAC) for the remaining work, assuming future work will be performed at the original budget rate. The term (BAC - EV) represents the remaining budget for the work yet to be completed. This approach is appropriate when current variances are considered atypical or one-time events, and the project team expects to complete the remaining work exactly as planned, effectively "resetting" performance expectations for the future.
- ✗
EAC = AC + ETC
Why it's wrong here
While EAC = AC + ETC is a fundamental relationship, this option is incomplete without specifying how the Estimate To Complete (ETC) is derived. In scenarios where past variances are not expected to continue, ETC should ideally be the remaining budget, which is (BAC - EV). If ETC were independently re-estimated based on the atypical variance, it might incorrectly project future costs. Therefore, simply stating EAC = AC + ETC doesn't provide the specific guidance needed for this particular scenario where future work is expected to proceed as planned.
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Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This PMP practice question is part of Courseiva's free PMI certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PMP exam.