## Earned Value Management

Your project is expected to run for three consecutive years. Your organization is introducing earned value management as part of the planning and managing of this project. The project budget 100.000 $. The budget is consistent across the three years. You are exactly 18 months into the project. 30 % of the total budget has been spent and 40 % of the work is complete. Your project is:

a) Ahead of schedule and over budget.

b) Ahead of schedule and under budget.

c) Behind schedule and over budget.

d) Behind schedule and under budget.

PMP Solution 11

We need to determine four critical terms; BAC, PV , AC and EV. BAC is given, it is the project budget 100,000 $. PV is a measure of how much work should be complete. The question says we are 18 months into a 3 year project. This means half of the work should be complete. So PV = 0,5 x 100,000 $ = 50,000 $. Then AC is a measure of how much money has been spent to date. The question states 30% of the budget has been spent, so AC = 0,3 x 100,000$ = 30,000$. On the other hand EV is a measure of how much work has been completed. Considering 40% of the work complete, EV = 0,4 x 100,000 $= 40,000$. Therefore, Schedule Variance SV = EV – PV; 40,000$ – 50,000 $ = -10,000$ which means the project is behind schedule since SV is negative.Cost Variance CV = EV – AC ; 40,000$ – 30,000 $ = 10,000 $. Since CV is positive the project is running under budget.Therefore the right answer is d).[PMBOK 6th edition, Page 233] [Project Costs Management].

Cheers

D ) Behind schedule and under budget