## Oliver 75 - 62nd Question

jyotimayank
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### Oliver 75 - 62nd Question

62. During a company event, you had the opportunity to talk to a colleague project manager. He told you that in his current project actual costs are 15% under cumulated costs budgeted for today.
What do you think?

A. The information given to you by the colleague is not sufficient to assess project performance.
B. The project will probably be completed with total costs remaining under budget until the end.
C. A significant cost increase during the further course of the project will probably bring the costs back to baseline level.
D. Original cost forecasting and budgeting for the project must have been poor to allow this variance.
Jyoti Gupta
PMP Mentor & Coach

iZenbridge Consultancy Pvt Ltd
Ananyapmp
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Joined: Fri Apr 22, 2016 11:25 am

### Re: Oliver 75 - 62nd Question

Is it C
Ramakanta
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### Re: Oliver 75 - 62nd Question

what would be the answer? pls explain.
jyotimayank
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### Re: Oliver 75 - 62nd Question

The colleague is only talking about the cost (costs are 15% under cumulated costs budgeted for present day).
Nothing is mention about the other aspects as schedule or anything.

It might be that the current scenario can change tomorrow if the schedule changes and you have to crash the schedule,which can lead to additional cost( as Schedule compression-Crashing leads to additional cost, and Fast tracking increases risk).

EAC & ETC are estimates i.e., forecasts in a situation where the BAC is clearly not going to be met due to the current happenings of the project.
These two values are calculated looking at actuals spent till now and the future requirements as per conditions. Where conditions are nothing but different variants.
EAC is always actuals spent till now plus estimates required to complete remaining work i.e. EAC = AC+ETC

While calculating forecasts, i.e. EAC/ETC, we need to always remember that AC is already spent and that money is not going to come back anyway. The only thing we can work out on the basis of the current situation is the rest of the work. Depending on the current situation we calculate ETC. Estimate at completion is the sum total of EAC = AC+ETC

Refer to Page 207-208 0f PMBOK® Guide 5th Edition

For more insight of this topic refer to the following blogs
http://www.izenbridge.com/blog/webinar-earned-value/
http://www.izenbridge.com/blog/what-is- ... -variants/
Jyoti Gupta
PMP Mentor & Coach

iZenbridge Consultancy Pvt Ltd
Ananyapmp
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Joined: Fri Apr 22, 2016 11:25 am

### Re: Oliver 75 - 62nd Question

Thanks Jyoti for the detailed description.
Ramakanta
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Joined: Sun Apr 03, 2016 9:44 am

### Re: Oliver 75 - 62nd Question

Thanks Jyoti for the prompt reply with detail explanation.