ETC Q

Submitted by crushPMP on Wed, 05/15/2013 - 03:43
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 As a project manager, you have selected Project A that has an initial budget of $1,000 out of which $800 has already been spent. To complete this project, you need an additional $500. Project B will require $1,200 only for completion. Which project would you prefer to manage and what will be its ETC?

 
 
  Choice 1 Project A, ETC of $800
 
  Choice 2 Project A, ETC of $1,000
 
  Choice 3 Project A, ETC of $500
 
  Choice 4 Project B, ETC of $1,200
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PMP / CAPM exam Question bank
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Jgrind07

Wed, 05/15/2013 - 03:59

Project A, ETC of $500 ?

 

ETC for Project A

ETC = EAC-AC

EAC =  AC+BottomUp ETC = =800+500 = 1300

 

Now ETC = 1300-800=500

So, ETC for Project A is $500

So ETC for project A is $ 500and for Project ETC will be $1200 (Project B will require $1,200 only for completion).

Project A has less ETC than Project.

So the Answer I think is Project A, ETC of $500

Am I correct?

Thanks

Jai

 

fr1.an

Wed, 05/15/2013 - 07:23

I think the answer is 4 and this is my reason:

Project A has the following data:

BAC=$1000

AC  = $800

ETC = $500 (Already given)

This means that this project already has a CPI of less than 1 since its variance at completion is a negative value :

VAC = BAC-EAC = 1000 - (800+500) = -$300. The project will be over budget at completion.

For project B,

the question did not recognize any variance, since it needs $1200 ONLY to complete

my thinking is that this means that BAC=EAC, so Variance =0

this suggests that CPI have to be 1. The project must be on budget to achieve this $1200 only as planned.

I don't think we can use ETC as a whole number to determine the project to choose, rather, CPI or VAC which are relative values. Maybe, the ETC art tests whether we understand the meaning of ETC.

So, I will choose project B with ETC of $1200

Geethika

Wed, 05/15/2013 - 07:58

 I think no calculations needed, 

While selecting projects/future decisions, sunk costs should not be considered

So Going forward, Project A -- 500$, Project B -- 1200$..Project A seems better with its ETC already given in Q

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cnppmp

Wed, 05/15/2013 - 08:04

The information provided for project A is appropriate with what ever provided.


For project B, the only information provided is ETC and ETC is forecasted estimate which is based on the previous performance of the project in terms of actual cost or EV etc. Which is missing for project B and also there is no mention about the BAC as well.


The comaprision between project A and pproject B caanot be made I guess. and poject with necessary information to proceed is the best choice, so project B.


Regards


CN Patil

BK

Wed, 05/15/2013 - 08:54

 3. Sunk cost will not be considered

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crushPMP

Wed, 05/15/2013 - 12:59

 I did it exactly like fr1.an but the correct ans is 3