A project manager is performing earned value management (EVM) for a cross-country pipeline project. The project manager has determined the ratio of earned value (EV) to actual cost (AC) for the project and has found the calculated result to be 0.9024.
What does this value mean for the project?
The value of 0.9024 is the Cost Performance Index (CPI), which is calculated as Earned Value (EV) divided by Actual Cost (AC). A CPI less than 1 indicates that the project is not earning the planned value with respect to the actual cost incurred, meaning the project has started exceeding the planned cost.
The figure is less than 1 which shows that AC>EV this means the project is earning less value than expected, A should be the right choice here.
Value is for SPI, rather than CPI
are both A and B same thing ?
B is the Answer. Here we talk about CPI=EV/AC so its COST.
CPI is for Cost and SPI fo Value
B. The project has started exceeding the planned cost This is because the project is earning less value than what was planned for the actual cost incurred
I'm voting for B as the correct answer to this question. However, looking at the complicated nature of the question and how it is worded, one will think it's a nonsense question and has no significance. This takes my mind to the fact that there will be 15 questions in the exam that won't be graded whether you answer them correctly or wrongly. So, I'm suspecting this question to be one of those questions that will have no value in the exam but will form part of the 180 questions. so let's don't overemphasize on determining the correct answer to this question when we are seeing it as not properly worded for better understanding. Without prejudice to the exam content, I still consider option B as the correct answer to this question.
Wow. i didnt know that :D
C is correct
EV = 0.9 AC so less cost here, tricky one
CPI = EV / AC, Cost Performance Index: An earned value management measure that indicates how efficiently the work is being performed with regard to the budgeted cost of the work.
Cost Value = Earned Value – Actual Cost, Negative value mean the project is over budget.
CPI=EV/AC, CPI is less than 1 means project is earning less than planned. ChatGPT also got the same answer.
Since A & B are same, we need to choose option which is balanced which is true in general.
the answer is A because we are talking value here by presenting CPI
C cannot be a correct answer, A is correct A ratio of less than 1 indicates that the project is over budget, while a ratio greater than 1 suggests that the project is under budget. In this case, a ratio of 0.9024 indicates that the project is slightly over budget.
A. The project is earning less value than was planned
The wording "has started" on B will confusing (since when). But the fact according to PMI also saying earned value must be bigger than actual cost. so answer A is more clear
If the CV is positive (CV>0), this means that the acquired value is greater than the actual cost (EV-AC>0 or EV>AC) and therefore the project has earned more value than planned, C is correc
CPI= EV/AC < 1, so A is correct
CPI is less than 1, so A is correct