# Top Tips for Tackling PMP EVM Questions (20+ Practice Questions Included)

## Learn these PMP EVM techniques to help you with EVM questions in the PMP Exam. Practice questions are also included to help applying the techniques.

Earned Value Management (EVM) Calculation questions are usually regarded as one of the most difficult part of the PMP® Exam. However, if Aspirants can understand the EVM Calculation formulas correctly and master a few skills to tackle the EVM questions, these dreaded EVM questions would become life-savers as nearly every Aspirants can get all the EVM questions correct.

Below you will find 20+ EVM practice questions categorized by related skills to help you understand what you are required to know in order to correctly answer all the EVM questions that would appear on the PMP® Exam. Try them and understand thoroughly how to tackle the questions through the explanations to each question.

You too will be able to get all EVM questions correct.

Note: the answer explanation to each question is directly under the question choices in the “grey box” — you can either move the cursor over it or highlight it with the mouse to reveal the answer……

Article Highlights

## EVM Graph Questions

The EVM graph questions are one of the easiest questions to answer as you will only need to understand the meaning of the relative positions of the AC, PV and EV:

- AC vs PV: whether the project is under or over budget (
**AC > PV = over budget; AC < PV = under budget**) - EV vs PV: whether the project is ahead of or behind schedule (
**EV > PV = ahead of schedule; EV < PV = behind schedule**)

- With reference to the diagram below, it can be inferred that the project is currently:

- ahead of schedule and under budget
- ahead of schedule and over budget
- behind schedule and under budget
- behind schedule and over budget

Solution: D

As of today,**AC > PV = over budget**and**EV < PV = behind schedule**, so the project is both “behind schedule and over budget”.

- With reference to the diagram below, it can be inferred that the project is currently:

- ahead of schedule and under budget
- ahead of schedule and over budget
- behind schedule and under budget
- behind schedule and over budget

Solution: C

As of today,**AC < EV = under budget**and**EV < PV = behind schedule**, so the project is “behind schedule and under budget”.

- With reference to the diagram below, it can be inferred that the project is currently:

- ahead of schedule and under budget
- ahead of schedule and over budget
- behind schedule and under budget
- behind schedule and over budget

Solution: B

As of today,**AC > PV = over budget**and**EV > PV = ahead of schedule**, so the project is “ahead of schedule and over budget”.

## Definition of EVM Metrics

These types of questions will test you on your understanding of the meaning of various EVM metrics:

**Planned Value (PV)**— how much work was scheduled to date**Earned Value (EV)**— how much work was completed to date**Actual Cost (AC)**— the amount of money spent so far**Budget at Completion (BAC)**— the total budget for the project**Estimate at Completion (EAC)**— the estimated total amount of money needed to be put into the project based on the information available as today**Estimate to Completion (ETC)**— how much more do we need to put into the project to complete it**Variance at Completion (VAC)**— the difference between the estimated total cost and the original budget**Cost Performance Index (CPI)**— ratio between EV and AC, to reflect whether the project work is under / on / over budget in relative terms**Schedule Performance Index (SPI)**— ratio between EV and PV, to reflect whether the project work is ahead of / on / behind schedule in relative terms**To Complete Performance Index (TCPI)**— the efficiency needed to finish the project on budget, it is the ratio between budgeted cost of work remaining and money remaining

- If a project has a Schedule Performance Index (SPI) of 0.90, this means that:
- 90% of the work planned to date has been completed
- 90% of the work of the whole project has been completed
- 90% of the budget planned to date has been spent
- 90% of the project budget has been spent

Solution: A

The Schedule Performance Index (SPI) represents the performance of the project in terms of schedule up to the moment. If it is smaller than 1, less than 100% of the scheduled work has been completed to date.

- If a project has a Cost Performance Index (CPI) of 0.90, this means that:
- 90% of the work planned to date has been completed
- 90% of the budget planned to date has been spent
- 111% of the budget planned to date has been spent
- 111% of the project budget has been spent

Solution: C

The Cost Performance Index (CPI) represents the performance of the project in terms of budget up to the moment. If it is smaller than 1, the project is currently over budget (i.e. has spent more than what has been planned).

- If a project has a To Complete Performance Index (TCPI) of 0.90, this means that:
- 90% of the work planned up to today has been completed
- 90% of the budget planned up to today has been spent
- the project can spend money at a rate 11% higher than planned and still meet the project budget
- the project can spend money at a rate 10% lower than planned to meet the project budget

Solution: C

The To Complete Performance Index (TCPI) is the efficiency needed to finish the project on budget. If it is smaller than 1, that means that we have more money left on the budget than the remaining Planned Value (PV) to achieve. Therefore, in theory, we can spend more money yet can still finish the project on budget.*(However, in reality, it is generally preferred to finish the project under budget. A TCPI smaller than 1 is a good sign that the project is going healthy.)*

- A project with both Schedule Performance Index (SPI) and Cost Performance Index (CPI) of 0.80. The project is currently:
- ahead of schedule and under budget
- behind schedule and under budget
- ahead of schedule and over budget
- behind schedule and over budget

Solution: D

**CPI < 1 = over budget**and**SPI < 1 = behind schedule**, so the project is both “behind schedule and over budget”.

- According to EVM, which term below represents the outstanding amount of money required to finish the project?
- Planned Value (PV)
- Earned Value (EV)
- Estimate to Complete (ETC)
- Estimate at Completion (EAC)

Solution: C

By definition, Estimate to Completion (ETC) is the amount of money we need to put into the project from today in order to complete it.

- According to EVM, which term below represents the budgeted cost of the work to be completed to date?
- Planned Value (PV)
- Earned Value (EV)
- Estimate to Complete (ETC)
- Estimate at Completion (EAC)

Solution: A

By definition, Planned Value (PV) is how much value of work was scheduled to achieve to date.

## Simple EVM Calculation Questions

For these types of questions, you will simply need to recall the correct EVM calculation formulas and correctly substitute the values into the formulas to arrive at the correct answer. Please do make use of the on-screen calculator / physical calculator provided to do the calculation even if you are a Maths wizard. It is a pity to lose marks for careless calculation even if you have selected the correct formula.

Also, most of such simple EVM calculation questions will supply more than enough information for you to use as a kind of distractor, it is a test of whether you can select the correct formulas as well as the correct values to substitute into the formulas.

**SV = EV – PV****CV = EV****–**AC**SPI = EV/PV****CPI = EV/AC****VAC = BAC – EAC**

- A project with Earned Value (EV) = $1000, Actual Cost (AC) = $800 and Planned Value (PV) = $800. What is the Schedule Variance (SV)?
- $200
- $0
- -$100
- -$200

Solution: A

**SV = EV – PV**

SV = $1000 – $800 = $200

Note that the Actual Cost (AC) is not used in the calculation.

- A project with Earned Value (EV) = $1000, Actual Cost (AC) = $800 and Planned Value (PV) = $800. What is the Cost Variance (CV)?
- $200
- $0
- -$100
- -$200

Solution: A

**CV = EV – AC**

CV = $1000 – $800 = $200

Note that the Planned Value (PV) is not used in the calculation.

- A project with Earned Value (EV) = $250, Actual Cost (AC) = $200 and Planned Value (PV) = $350. What is the Schedule Performance Index (SPI)?
- 1.25
- 0.80
- 0.71
- 1.40

Solution: C

The formula to be used to calculate SPI is:

**SPI = EV / PV**

SPI = $250 / $350 = 0.71

- A project with Earned Value (EV) = $250, Actual Cost (AC) = $200 and Planned Value (PV) = $350. What is the Cost Performance Index (CPI)?
- 1.25
- 0.80
- 0.71
- 1.40

Solution: A

The formula to be used to calculate CPI is:

**CPI = EV / AC**

CPI = $250 / $200 = 1.25

## EVM Estimate At Completion (EAC) Questions

Since there are multiple Estimate at Completion (EAC) formulas, Aspirants should be able to get clues from the questions on which EAC formula to use:

**EAC = BAC/CPI**

he delay is caused by reasons which is likely to continue)*If we believe the project will continue to spend at the same rate up to now (e.g. t***EAC = AC + (BAC-EV)**

*If we believe that future expenditures will occur at the original forecasted amount (no more delays of the same kind in future)***EAC = AC + [(BAC-EV)/(SPI*CPI)]**

*If we believe that both current cost and current schedule performance will impact future cost performance***EAC = AC + New Estimate**

*If we believe the original conditions and assumptions are wrong*

- For the project with original project budget $1000 and both the Cost Performance Index (CPI) and Schedule Performance Index (SPI) equal 1. Assuming the project will continue to spend money at the same rate, what is the Estimate At Completion (EAC) of the project?
- $833
- $933
- $1,000
- $1,033

Solution: C

As the project will continue to spend at the same current rate, the formula to be used would be:

**EAC = BAC/CPI**

EAC = $1000 / 1 = $1000

- For the project with Earned Value (EV) = $360, Actual Cost (AC) = $400 and both Cost Performance Index (CPI) and Schedule Performance Index (SPI) equal 0.90. The original project budget is $1,000. Assuming the remaining work will be impacted by the current cost performance and current schedule performance, what is the Estimate At Completion (EAC) of the project?
- $1,090
- $1,190
- $1,290
- $1,390

Solution: B

As the project will be impacted by the current cost performance and current schedule performance, the formula would be:

**EAC = AC + [(BAC-EV)/(SPI*CPI)]**

EAC = $400 + [($1000 – $360) / (0.9 * 0.9)] = $1190

- For a project with Estimate at Completion (EAC) = $120,000 and Cost Performance Index (CPI) is 0.90. What is the Budget at Completion (BAC)?
- $108,000
- $118,000
- $158,000
- $208,000

Solution: A

As no information is given on the future performance of the project, we could safely assume that the project will spend at the same rate. So we will make use of the formula:

**EAC = BAC / CPI**

$120,000 = BAC / 0.90

BAC = $120,000 * 0.90 = $108,000

## Wordy Calculation Questions

Usually these questions will describe you as the project manager of a project which is X months into the schedule and X% of work has been completed so far along with lots of other information. The questions will span several lines. Then it will ask you to calculate some EVM metrics based on the information provided.

Also, the questions will usually not make use of EVM terms (like Planned Value, Actual Cost, Earned Value, etc.) but you can easily infer those values from the descriptions provided. The key to answering wordy questions correctly is to read the questions carefully and extract useful information from the questions and write down PV, EV, AC, etc. while you are reading the questions.

- You are the project manager of a housing project in which a total of 10 houses are to be build over 10 months (1 house per month). The total budget for the housing project is $1,000,000. The project is now at the end of the 6th month with 5 houses built and $500,000 spent. The project is behind schedule owing to a work strike for a month. The Cost Performance Index (CPI) for the project is:
- 1.0
- 0.9
- 1.1
- 1.2

Solution: A

The formula to be used to calculate CPI is:

**CPI = EV / AC**

CPI = $500,000 / $500,000 = 1.0

- You are the project manager of a road paving project. A total of 10km of road is to be paved over a 5-month period. The total budget for the project is $10,000. The project is now at the end of the 3rd month with 8km of road paved and $8,000 spent. The Schedule Performance Index (SPI) for the project is:
- 0.78
- 0.98
- 1.20
- 1.33

Solution: D

Since the road is assumed to be paved linearly, i.e. 2km of road per month. At the end of 3rd month, the PV should be $6,000 (for 6km of road). The formula to be used to calculate SPI is:

**SPI = EV / PV**

CPI = $8,000 / $6,000 = 1.33

## Complicated EVM Calculation Questions

These types of questions will required Aspirants to make use of more than 1 EVM formulas. These questions are considered the most difficult of all PMP® EVM questions. Most Aspirants not coming from a Science / Maths background would not even know which EVM formulas to pick, let alone arriving at the correct answer. **But the good news is that these questions would seldom appear on the PMP® Exam (for your reference: I got none in my PMP® Exam).**

- For a project with Earned Value (EV) = $300, Actual Cost (AC) = $350 and Planned Value (PV) = $400. The overall project budget is $1,000. Assume that you will continue to spend at the same rate as you are currently spending. What is the Variance At Completion (VAC)?
- -$150
- $150
- -$167
- $167

Solution: C

As the project will continue to spend at the same current rate, the formula to be used would be:

**VAC = BAC – EAC**

**EAC = BAC/CPI**

CPI = EV/AC

VAC = BAC – BAC/(EV/AC) =$1000 – $1000/($300/$350) = -$167

- For the project with Earned Value (EV) = $300, Actual Cost (AC) = $250 and Planned Value (PV) = $300. The original project budget is $1000. Assuming the project will continue to spend money at the same rate, what is the Estimate At Completion (EAC) of the project?
- $833
- $933
- $1,000
- $1,033

Solution: A

As the project will continue to spend at the same current rate, the formula to be used would be:

**EAC = BAC/CPI**CPI = EV/AC

EAC = BAC/(EV/AC) = $1000 / ($300/$250) = $833

- For the project with Earned Value (EV) = $350, Actual Cost (AC) = $300 and Planned Value (PV) = $400. The original project budget is $1,000. Assuming the remaining work will be impacted by the current cost performance and current schedule performance, what is the Estimate At Completion (EAC) of the project?
- $837
- $937
- $987
- $1,280

Solution: B

As the project will be impacted by the current cost performance and current schedule performance, the formula would be:

**EAC = AC + [(BAC-EV)/(SPI*CPI)]**

SPI = EV / PV = $350 / $400 = 0.875

CPI = EV / AC = $350 / $300 = 1.167

EAC = BAC/(EV/AC) = $300 + [($1000 – $350) / (0.875 * 1.167)] = $937

## Further Reading

After learning the skills of EVM questions and tackling the questions here, you will be equipped with necessary skills to answer EVM questions correctly.

** Hope this post and the PMP® Exam Formulas Guide will help you with your PMP® Exam.*

`Other articles in the series PMP® Exam Preparation`- PMP Formulas and Calculation for PMP Certification Demystified
- PMP Earned Value Management (EVM) Calculation Explained in Simple Terms
- Top Tips for Tackling PMP EVM Questions (20+ Practice Questions Included)
- Are You PMP Exam Ready? List of Free PMP Mock Exam Questions w/w Benchmark for the NEW PMP Exam
- An Introduction to PMBOK Guide: Knowledge Areas, Processes and Process Groups
- PMP Certification Study Notes 1 - Terms and Concepts
- How to Study for PMI PMP? Learn PMI-ism First!
- PMP Certification Study Notes 2/3 - Project Management Processes and Knowledge Areas
- PMP Certification Study Notes 4 - Project Integration Management
- PMP Certification Study Notes 5 - Project Scope Management
- PMP Certification Study Notes 6 - Project Schedule Management
- PMP Certification Study Notes 7 – Project Cost Management
- PMP Certification Study Notes 8 - Project Quality Management
- PMP Certification Study Notes 9 - Project Resource Management
- PMP Certification Study Notes 10 - Project Communications Management
- PMP Certification Study Notes 11 - Project Risk Management
- PMP Certification Study Notes 13 - Project Stakeholder Management
- PMP / PMI-ACP Certification Study Notes - Professional and Social Responsibility
- PMP Certification Study Notes 14 - Agile Practice Guide
- List of Best FREE PMP Exam Prep Resources Every Aspirant Should Know in 2019
- PMP Certification Study Notes 12 - Project Procurement Management

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I finally get this, all thanks to your tremendous page! Cheers for breaking this out so clearly. Been struggling to get my head around EVM calculations for a while. Great stuff

Thanks! Wish you PMP success!

In my opinion, the question NO.3 not really exactly. The choice C should be adjusted as:

In the remaining time, the project can spend money at a rate 11% higher than planned and still meet the project budget.

Hi Truc, that’s a great option.

Wish you PMP success!

Hi Edward,

Thanks for sharing this and it was very helpful!

I could see that the complicated EVM questions are solved based upon their precedence, I am afraid if the build-in BASIC calculator in PMP exam has these features(scientific mode).

The built-in calculator is indeed a basic one indeed. But don’t worry, as the PMP Exam is a test of your project management knowledge and not your calculation skills, the basic calculator is enough.

Wish you PMP success!

Very useful. Thank you

thanks a lot for this. im yet to take he classes, but this helps to undertand.

Glad that you find this useful. Wish you PMP success!

Hello Edward – I just wanted to thank you for sharing.

Great site – thank you. For Question EAC #2:

For the project with Earned Value (EV) = $360, Actual Cost (AC) = $400 and both Cost Performance Index (CPI) and Schedule Performance Index (SPI) equal 0.90. The original project budget is $1,000. Assuming the remaining work will be impacted by the current cost performance and current schedule performance, what is the Estimate At Completion (EAC) of the project?

Could one use EAC = BAC/CPI = $1,000/0.9 = $1,111 instead of EAC = AC + (BAC-CV)/(SPI*CIP) = $1,190? Why not? Thank you.

VERY helpful, thank you for sharing this!

Glad that you find it useful. Wish you PMP success!

Hi Ed, thanks so much for your site. I’m also preparing for the exam and greatly appreciate your assistance. I have a question on EAC # 2. I followed the formula EAC = AC +(BAC-EV)/(SPI*CPI) Can you please explain how you arrived at 1190? I belive your ans is incorrect and I got 1283.95

Sorry, I just substitute the values into the formula and arrive at the answer. Could you explain in more details how you arrive at your answer? Thanks!

For current project status, do we use PV as of today or for the total budget?

PV is calculated as of today. Wish you PMP success!

Hi Edward !, Loved the design of website, especially the display of answer when cursor is moved over the gray area …. very innovative not seen on any platform, keep it up

I have Queries in Q2 of Wordy questions-

1) Answer is explained as :

Since the road is assumed to be paved linearly, i.e. 2km of road per month. At the end of 3rd month, the PV should be $6,000 (for 6km of road). The formula to be used to calculate SPI is:

SPI = EV / PV

CPI = $8,000 / $6,000 = 1.33

It seems CPI & SPI are confused in answer . or is it that i am not getting the answer?

As per my understanding information that can be figured out from question is

AC= 8000 (Since Its money spent, i.e. cost till date)

BAC=10000

PV=6000

and information is insufficient to calculate CPI or CPI

If only we assume EV=8000 which is not seems to be given in question then only we can get answer.

can you please explain

2)

Also I would like to discuss , as question says money spent at end of 3rd month is 8000 , you have taken it as EV, should it not be AC at end of third month?

Thanks in advance

Yes, AC is $8000 at the end of the 3rd month. And as 8 km of road has already been paved, this is the EV which is also $8000. So we will be able to calculate the CPI. Thanks!

Wish you PMP success!

Hi Ed, thanks so much for your site. I’m also preparing for the exam and greatly appreciate your assistance. I have a question on EAC # 2. I followed the formula EAC = AC +(BAC-EV)/(SPI*CPI) Can you please explain how you arrived at 1190? Thank you.

Just by substituting the formula with the actual values:

EAC = $400 + [($1000 – $360) / (0.9 * 0.9)] = $1190

There is no need to do the calculation by yourself, you will be provided with a calculator. Wish you PMP success!

Thanks for your response. I re-calculated and did arrive at 1190 this time.

HI Edward , Thanks for providing the questions and explanations .It is very useful .

I have a question specific to CPI (no 2) . How did we arrive at 111% for a cpi of 0.90 . Please let me know

Since CPI = EV / AC, if CPI = 0.9, that means the project is now over budget (i.e. AC > EV by 111% [1/0.9 * 100%]).

Wish you PMP success!

Hello! This is very helpful as I am struggling, struggling with EVM. I have bookmarked your site and will use it for reference. Many thanks!

Glad that you find this useful. Wish you PMP success!

Edward, I want to express my sincerely thanks and appreciation for sharing your notes! I wrote and passed my PMP exam yesterday. Your materials helped immensely with both my review and preparation! They were all very relevant for the exam! Many, many thanks!,

Don’t mention it. It is my hope to be able to offer some assistance to fellow PMP Aspirants.

Wish you certification success!

Thank you dear

Hi Edward,

In section ‘Complicated EVM Calculation Questions’, For question No.1, my answer is just not coming to -$167.

I have calculated it several times and it’s giving me -$176.

Can you check if it correct or clarify if I’m not using it the right way please. Appreciate your work.

Hi Sara,

Since the formulas is

VAC = BAC – BAC/(EV/AC) =$1000 – $1000/($300/$350) = $1000 – $1167 =-$167

The answer would be -$167.

Have I missed something?

Hi Edward,

I am having same problem and i got ur ans as well as 176 the difference is when we use CPI 0.85 ans is -176 but if we use 0.857 as CPI ans is -167 now am confused which one we suppose to use because i thought CPI will be only 0.85 can u please help me which one is right ….

Hi Edward,

first of all I would like to thank you very much for this very, very helpful webside. I am preparing for the PMP exam in december `17 and I am very happy for your support.

I just calculated the results on your EVM test questions. I

On my opinion there is a typo on `Complicated EVM Calculation Questions` #3

I think in the equation AC was typed incorrectly with 300 instead of 1000

EAC = BAC/(EV/AC) = $300 + [($1000 – $350) / (0.875 * 1.167)] = $937

The result would therefore be 1636 instead of 937.

Regards

Anina

Hi Anina,

Thanks for your comment.

As currently the AC < EV and assuming the project will carry on like this, the final cost will be less than the original planned cost. Therefore, the final cost would be less than 1000. But as this is such a complicated calculation question, it is highly unlikely that you will find it in the real PMP Exam paper. Wish you PMP success!

Guess the point 2 needs correction:

1. Under/Over Budget CPI is EV vs AC

2 Ahead/Behind Schedule SPI is EV vs PV

Sorry, could you please point out exactly which part needs correction. I have doubled checked but just couldn’t find the typo. Thanks!

Update: Yes, my bad. The typo has been corrected in the comment below. Thanks!

Hii.. I found the questions and the way they have been structured very fruitful. Thanks a lot for sharing it

Hope the info provided here is useful to you. Wish you PMP success!

please confirm to me that question number 6 :

6.According to EVM, which term below represents the budgeted cost of the work to be completed to date?

how can be PV is the right answer ?

PV (Planned Value) by definition is the cost of the work until now as planned in the budget. According to PMBOK Guide, “Planned Value (PV) is the authorized budget assigned to work to be accomplished for an activity or WBS component.”

I am very happy to report that I passed the PMP exam late last week! It was definitely tough, could not have done it without a prep course as well as extensive studying/practice with the excellent materials you shared (80+ hours).

Many thanks for your assistance!

Congratulations! Welcome to the PMP club!

Congratulations for your success. I would like to get touch with you as you have given recently exam and I am also trying to give exam in November. Please suggest if I can talk with you more.

Salam Edward,

I am more than happy that I have stumbled by your log!!

It has become my first reference in my journey to achieve the PMP certification.

Although, I have a question if you please:

Regarding the EVM Graph Questions, and in order to find out whether the project is under or over budget (the cost performance),

should we compare AC vs PV OR AC vs EV ??

Thanks for your question.

For finding out:

1) whether the project in under / over budget, compare AC vs EV

2) whether the project in ahead of / behind schedule, compare EV vs PV

Sorry that I cannot explain these in more details as these are the definition in EVM for budget and schedule.

Wish you PMP success!

Hi Edward,

I am on my last week of preparation and I am so happy I came across your blog and very smart questions. Thank you for the great article!!

Really hope that my sharing on the website will be of assistance to your PMP journey.

Wish you PMP success!

Hi Edward…..Please check.

QUESTION :

For a project with Earned Value (EV) = $300, Actual Cost (AC) = $350 and Planned Value (PV) = $400. The overall project budget is $1,000. Assume that you will continue to spend at the same rate as you are currently spending. What is the Variance At Completion (VAC)?

As the project will continue to spend at the same current rate, the formula to be used would be:

Answer :

VAC = BAC – EAC

EAC = BAC/CPI

CPI = EV/AC

VAC = BAC – BAC/(EV/AC) =$1000 – $1000/($300/$350) = -$167

is VAC formula in last line is correct? it should be BAC-[EAC/(EV/AC)]…..Please check and advise for correct answer

Apologise, its correct, Please ignore.

Hi Manish,

Thanks for your comments. Wish you PMP success!

Where are the answers?

Just hover your mouse cursor over the grey boxes after each question and the answer will reveal in no time.

Wish you PMP success!

I’ve just went through all the questions and nailed all of them except 2. My PMP exam is scheduled for tomorrow. These test questions were extremely helpful to find out where I stand, thank you for posting this.

Wish you PMP success!

Hi Edward, thank you so much for this blog! I used the material here a lot during my 3 months prep period. I took the exam today and passed on the first attempt! Thank you so much. I cant help feeling guilty that I didn’t pay a penny to use your material.

Hi Edward,

Congratulations on being PMP certified! It is my humble hope that my sharing would be able to offer some assistance to fellow PMP Aspirants. Thanks a lot for letting me know I did help you a bit in your PMP preparation!

Hi Ed,

Thanks for sharing article !

I believe explanation for Q2 is not correct.

CPI is for to know under/over budget problem.

if EV/AC is less than 1 it is over budget.

Comparing AC to PV not always right for budget graph problem.

In this question what if reverse EV & AC lines ??

S

Hi Saurbh,

Thanks a lot for spotting the typo. Yes you are right, when asked about budget problems, it is always a comparison between earned value (EV) and actual cost (AC).

EV > AC = under budget

AC > EV = over budget

Wish you PMP success!

This article is awesome!! I understood all about EVM through this page, so cool, well-structured and easy to understand.

And the formulas here are so easy to understand:

http://edward-designer.com/web/pmp-calculation-formulae/

THANK YOU! THANK YOU! THANK YOU!!!!!!!!!!!!!

Dude, this site is awesome! I stumbled on it while preparing for my exam tomorrow. I really like how you can roll over an area to get answer like the flash cards and the calculation questions above, keeps your focus only on that question or term. Keep up the great work!

Hi Edward, why it is 111% ?

That was the other question I had…why 111%? Hoping Edward or someone else can shed some light on this.

This is what I understood from that question but the answer does not match:

“This means for every $1 spent, the project is producing only 90 cents in work.”

Hi Kumar,

Yes, you are right for “This means for every $1 spent, the project is producing only 90 cents in work.”.

Since CPI = EV / AC, if CPI = 0.9, that means the project is now over budget (i.e. AC > EV by 111% [1/0.9 * 100%]).

Great website Edward! Appreciate the awesome work you’ve put in. Thank you!

You have the answer as C for #2 “If a project has a Cost Performance Index (CPI) of 0.90, this means that:”. Is the answer not B? Please advise.

Thanks,

Kumar

Yes, since the CPI is below 1, it is over budget. So more money should have been spent than planned (hence 111%).

Thank you for the explanation. 🙂

In a 1 liner – this blog is a life saver – extremely well structured – taking the reader step by step.

With very useful, short and straight to the point example and explanations.

I’d say every PMP student MUST read this blog – well shared Edward.

It is very rare to find such comprehensive yet simple to understand – especially on the EVM topic.

Thank you again, you do deserve a medal my friend !

As per PMBOK5 VAC=BAC-EAC but its given as EAC-BAC. Pls clarify.

Thanks Anil,

It is a typo. The formula for VAC has been amended in the post.

For number 1 why are we using AC vs PV to determine budget ??? Sjhouldn’t it be SPI= EV/PV and CPI =EV/AC therefore SPI <1 and CPI <1 behind sked and underbudget ?? thanks for your help

COrrection CPI <1 is over budget

But I would just like to know the logic behind using Ac vs PV thanks !

Hi Gabriel,

Thanks for your comments. Actually, it is okay to make use of CPI and SPI to make inference from the graph.

However, it is enough just to compare AC vs PV as PV is the *planned* expenditure for a specific point during the project while AC is the *actual* expenditure. If the project is on budget, AC = PV.

If you spend more than what’s planned, then the project is currently over budget and you will need to take measures to reduce expenditure from now on in order to meet the overall budget.