ETC question.
Submitted by Jp2786 on Sun, 06/01/2014 - 17:59
A project was estimated to cost $ 200,000 with a timeline of 10 months. Due to a shipment delay, the schedule was slightly delayed. This was however made up by receiving the first batch of materials for the project by air. The net result was that there was some additional cost in the project. At the end of the second month, the Project Manager reviews the project and finds that the project is 20% complete and Actual Costs are $ 50,000. The Estimate to complete (ETC) for the project would now be:
$160,000
$210,000
$250,000
$200,000
Can you please help me arrive at the correct answer. I already know what the correct answer is but I want to know how its done.
Forums:
admin
Mon, 06/02/2014 - 10:29
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There are many ways to do
There are many ways to do this, its a simple question
20% completion means PV was $40K, AC is $50K,
Cost Variance is $10K
Since no other variables are there. New cost should be $210K
Jp2786
Mon, 06/02/2014 - 17:03
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Scordo
This question is from scordo exams
the formula they have used is BAC - EV (as opposed to the one given in PMBOK that is EAC-AC). can you please let me why? Below is the sol
The Budget at completion (BAC) = $ 200,000 (given). The Actual Cost (AC) = $ 50,000 (given). The Earned value (EV) = ( 2 /10 ) * 200,000 since 20% of the project is complete i.e. 2 months out of 10. Hence, Earned Value (EV) = $ 40,000. This is an instance of an atypical situation in the project. ETC = BAC - EV = $200,000 - $40,000 = $160,000
sunku65
Tue, 06/03/2014 - 15:15
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@JP,
@JP,
That is print mistake.
The Present Value formula is 2/12 * 200,000 = 40,000
Did you observe calculating EV is not the 2/10 *200,000 formula.
The actual EV formula = Actual % of work completed * 200,000= 40,000
By luckily both the equations get same answer that is why the publisher
did't get a chance to figure it out.
EAC = AC+(BAC-EV) = 50,000+200,000 -40,000 = 210,000
Any we know the formula of ETC = EAC-AC for atypical one.
ETC = 210,000-50,000 = 160,000
Thanks,
Lax
sunku65
Tue, 06/03/2014 - 15:55
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We know the formula EAC= AC+
We know the formula EAC= AC+(BAC-EV)
ETC=EAC-AC substitute the EAC formula in EAc
THEN ETC = AC+(BAC-EV)-AC
ETC= AC+BAC-EV-AC here AC nullifies
ETC= BAC-EV
Jp2786
Tue, 06/03/2014 - 17:03
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thanks a lot lax
Hey thanks a lot for your detailed post.
I cant find your mail id in your profile can you IM me.