A project has a total budget of $800,000 and is planned to be completed in 12 months. After 5 months, half of the budget is spent, and the following data is provided:Planned Value (PV) = $350,000 Earned Value (EV) = $250,000 Remaining Work requires an efficiency factor of 0.9 on the current performance Given this information, calculate the Estimate at Completion (EAC) using the following formula for atypical conditions:EAC=AC+BAC−EVCPI×Efficiency FactorEAC = AC + \frac{BAC - EV}{CPI imes Efficiency \ Factor}

Question

A project has a total budget of $800,000 and is planned to be completed in 12 months. After 5 months, half of the budget is spent, and the following data is provided:Planned Value (PV) = $350,000 Earned Value (EV) = $250,000 Remaining Work requires an efficiency factor of 0.9 on the current performance Given this information, calculate the Estimate at Completion (EAC) using the following formula for atypical conditions:EAC=AC+BAC−EVCPI×Efficiency FactorEAC = AC + \frac{BAC - EV}{CPI 	imes Efficiency \ Factor}

BlackTom AI · Accepted Answer

We start by restating the given data and identifying the key variables to compute EAC under atypical conditions.
- Total Budget (BAC) = 800,000
- Planned Value (PV) after 5 months = 350,000
- Earned Value (EV) after 5 months = 250,000
- Amount spent so far (Actual Cost, AC) = since half the budget is spent in 5 months, AC = 800,000 / 2 = 400,000
- Remaining Work requires an efficiency factor of 0.9 on current performance
- CPI (Cost Performance Index) = EV / AC = 250,000 / 400,000 = 0.625
- BAC − EV = 800,000 − 250,000 = 550,000
- Efficiency Factor = 0.9

Now apply the atypical EAC formula provided: EAC = AC + (BAC − EV) / (CPI × Efficiency Factor).
- Compute the denominator: CPI × Efficiency Factor = 0.625 × 0.9 = 0.5625.
- Compute the fraction: (BAC − EV) / (CPI × Efficiency Factor) = 550,000 / 0.5625 = 977,777.78 (approximately).
- Add to AC: EAC = 400,000 + 977,777.78 = 1,377,777.78, which rounds to 1,377,778.

Now evaluate the provided options against this result:
- a. $1,111,111: This is significantly smaller than the calculated EAC. It would imply a much higher CPI or a much smaller adjustment term, neither of which matches the given EV, AC, and efficiency factor.
- b. $1,258,333: This number is also lower than the computed EAC. It could arise from a miscalculation of the CPI or not including the full BAC−EV adjustment, but it does not align with the formula and values.
- c. $1,377,778: This matches the computed EAC using the provided formula EAC = AC + (BAC − EV) / (CPI × Efficiency Factor) with AC = 400,000, CPI = 0.625, and Efficiency Factor = 0.9. The arithmetic shows 400,000 + 550,000 / 0.5625 ≈ 1,377,778.
- d. $1,555,556: This would require a larger adjustment term than calculated, implying a smaller divisor or larger numerator, which is inconsistent with (BAC − EV) and CPI × Efficiency Factor derived from EV/AC and the given efficiency factor.
- e. $1,466,667: This value lies between the incorrect options and the correct one, but it does not equal the precise result from the formula, indicating a rounding or arithmetic discrepancy if someone tried to mix steps.

In summary, by plugging the provided figures into the atypical EAC formula and performing the arithmetic carefully, option c (1,377,778) emerges as the result that exactly matches the computation. The other choices reflect common misapplications or miscalculations, such as omitting the CPI × Efficiency Factor in the denominator or misestimating AC, EV, or the adjustment term.

CVEN9731 Project Management Framework - 2025 T3

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