In Project Cost Management, specifically within the Monitor and Control Project Work process, Earned Value Management (EVM) is used to assess project performance. To find the Earned Value (EV) with the information provided, we must use the Estimate at Completion (EAC) formula that fits the data.
1. Identify the given values:
Budget at Completion (BAC) = $220,000
Actual Cost (AC) = $150,000
Estimate at Completion (EAC) = $250,000
2. Select the appropriate EAC formula:
The PMBOK® Guide provides several formulas for EAC. When the project is expected to perform the remaining work at the budgeted rate (atypical variance), the formula is:
$$EAC = AC + (BAC - EV)$$
3. Solve for EV:
$250,000 = 150,000 + (220,000 - EV)$
Subtract $150,000 from both sides: $100,000 = 220,000 - EV$
Rearrange to solve for EV: $EV = 220,000 - 100,000$
$EV = 120,000$
Analysis of Distractors:
A (US$-30,000): This is the Variance at Completion (VAC) ($VAC = BAC - EAC$ or $220,000 - 250,000 = -30,000$). It represents the projected budget overrun, not the value of the work performed.
C (US$370,000): This value does not correlate with standard EVM formulas using the provided data (it is the sum of AC and BAC, which is not a standard metric).
D (US$400,000): This value is unrelated to the provided project metrics.
Key Concept: Earned Value (EV) is the measure of work performed expressed in terms of the budget authorized for that work. In this case, even though we have spent $150,000 (AC), the value of the work actually completed according to the budget is $120,000.
