Figure 1. Drug Surveillance Aircraft Project - Monthly Performance Report
(October 31, 2024)

WBS Element

Planned Value
(PV)

Earned Value
(EV)

Actual Cost
(AC)

2.01 Airframe

48000

48000

50000

2.02 Engines

22000

21000

23000

2.03 Avionics

80000

60000

45000

2.04 Communications

30000

30000

30000

2.05 Tech. Manuals

42000

42000

48000

2.06 Spares

40000

35000

42000

2.07 Training

80000

80000

86000

Project Total

342000

316000

324000

Consider the project performance report presented in figure 1. What valid conclusion can you draw regarding the project cost performance as of October 31, 2024?

Question

Figure 1. Drug Surveillance Aircraft Project - Monthly Performance Report
(October 31, 2024)

WBS Element

Planned Value
(PV)

Earned Value
(EV)

Actual Cost
(AC)

2.01 Airframe

48000

50000

2.02 Engines

22000

21000

23000

2.03 Avionics

80000

60000

45000

2.04 Communications

30000

2.05 Tech. Manuals

42000

48000

2.06 Spares

40000

35000

42000

2.07 Training

80000

86000

Project Total

342000

316000

324000

Consider the project performance report presented in figure 1. What valid conclusion can you draw regarding the project cost performance as of October 31, 2024?

BlackTom AI · Accepted Answer

To start, I will restate the core data from the report so we can compare planned, earned, and actual costs accurately.
- Planned Value (PV) totals: 342,000
- Earned Value (EV) totals: 316,000
- Actual Cost (AC) totals: 324,000
With these numbers, we can evaluate each answer option by computing the key cost-performance indicators and variances.

Option 1: "The project is $8,000 over budget"
- The cost variance (CV) is EV minus AC: 316,000 − 324,000 = −8,000. A negative CV indicates costs have exceeded the value of work actually performed, i.e., cost overrun relative to earned value.
- This implies the project is over budget by $8,000 when comparing what has been earned (work completed) to what has been spent (actual cost).
- Note that while PV is 342,000, indicating the planned spending for the work scheduled, the key measure for “over budget” is whether AC exceeds EV. Here AC > EV, so the 8k over budget interpretation aligns with standard EV/CPI analysis.

Option 2: "The project is $18,000 over budget"
- To claim 18,000 over budget, we would need either CV = −18,000 or AC exceeding EV by 18,000. However, CV = −8,000 and AC − EV = 8,000, not 18,000.
- The numbers do not support an 18k over-budget conclusion based on these EV/AC values.

Option 3: "The project is on budget"
- Being on budget would require AC to equal EV (or CV ≈ 0). Here AC = 324,000 and EV = 316,000, so AC exceeds EV by 8,000. That is a cost overrun, not on-budget performance.
- Therefore this option is incorrect.

Option 4: "The project is $26,000 under budget"
- This would imply spending is significantly less than planned or earned values by 26k. Since PV is 342,000 and AC is 324,000, the actual cost is not 26k under PV or EV; in fact, AC is 18,000 less than PV but 8,000 more than EV. The notion of being 26k under budget does not align with the provided CA/EV values.
- This makes the option inaccurate given the data.

In summary, evaluating the numerical relationships among PV, EV, and AC shows that AC exceeds EV by 8,000, signaling a cost overrun relative to the work completed. The other options misstate the variance either by referencing the wrong comparison (PV vs. AC) or by using incorrect dollar amounts. The correct interpretation based on earned value analysis is that the project is over budget by $8,000, as reflected by CV = −8,000 and AC > EV.

PMGT5820 (all) Week 7 Knowledge Test - Evaluate and manage project progress

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