Module 15 - Earned Value Management

Question 1

What does Earned Value Management (EVM) measure?

Answer 1

Project performance and progress

EVM compares planned work with completed work to forecast performance problems.

Question 2

Name the three key data elements in Earned Value Analysis.

Answer 2

• Actual Cost of Work Performed (ACWP)
• Budgeted Cost of Work Performed (BCWP)
• Budgeted Cost of Work Scheduled (BCWS)

These elements are essential for conducting earned value analysis.

Question 3

True or false: EVM ties directly to cost estimating.

Answer 3

FALSE

EVM provides data that cost estimators often use, but it does not directly tie to cost estimating.

Question 4

What is the purpose of an Earned Value Management System (EVMS)?

Answer 4

A multi-faceted management planning tool

EVMS integrates technical scope with time-phased cost or budget for program planning and execution.

Question 5

Fill in the blank: EVM provides a framework to conduct integrated planning and execution, helping program managers understand _______.

Answer 5

problem areas

This understanding allows for mitigation of cost overruns and schedule delays.

Question 6

What are the practical applications of EVM for a cost estimator?

Answer 6

• Developing more accurate Estimates At Complete (EACs)
• Predicting costs for analogous programs
• Developing cost estimating relationships

These applications enhance the accuracy of cost estimations.

Question 7

What is the Program Management Baseline (PMB)?

Answer 7

The baseline against which EVM is employed

A good PMB is developed using a resource-loaded schedule.

Question 8

What does Level of Effort (LOE) refer to in EVM?

Answer 8

Support activities of short duration which are periodically repeated

LOE tasks have less technical integration compared to discrete EVM methods.

Question 9

What is a Control Account (CA) in EVM?

Answer 9

Work assigned to one organizational element on one CWBS element

CAs are the focal point for accumulating actual costs and comparing them to BCWP.

Question 10

What is the role of a Control Account Manager (CAM)?

Answer 10

Responsible for managing work and tracking EV data

The CAM analyzes earned value metrics and reports on variances.

Question 11

What is the Work Breakdown Structure (WBS)?

Answer 11

A hierarchical structure that organizes project tasks

The WBS is critical for managing and reporting project performance.

Question 12

True or false: EVM is best suited for projects with open-ended or undefined objectives.

Answer 12

FALSE

EVM is best for projects with defined deliverables and strict budget limits.

Question 13

What is the Integrated Baseline Review (IBR)?

Answer 13

A review to assure the baseline supports program success

The IBR occurs early in the program’s life.

Question 14

Fill in the blank: EVM provides an early warning of _______ or schedule issues.

Answer 14

cost

This early tracking improves project accountability.

Question 15

What are the benefits of using EVM?

Answer 15

• Early warning of cost or schedule issues
• Clear definition of work scope
• Objective measurement and analysis

These benefits enhance project management effectiveness.

Question 16

What is the significance of Earned Value (EV) in project tracking?

Answer 16

It adds a new dimension by measuring work accomplished

EV helps determine if the project is on track regarding cost and schedule.

Question 17

What are Work Packages in project management?

Answer 17

• Detailed, short-span tasks
• Typically last four to six weeks
• Required to accomplish CA objectives

Planning Packages entail future work yet to be planned in detail as work packages.

Question 18

What factors determine the decision to detail plan all work versus only near-term work?

Answer 18

• Size of the project
• Scope of the project
• Complexity of the project
• Oversight requirements

Some projects detail plan the entire effort up front rather than working a rolling wave of detail planning.

Question 19

List the resources required to complete work effort in work packages.

Answer 19

• Direct labor
• Material
• Other Direct Charges (ODCs)

Resources are assigned to each work and planning package.

Question 20

What does BCWS stand for in Earned Value data elements?

Answer 20

Budgeted Cost of Work Scheduled

It represents the plan consisting of time-phased dollars associated with work packages.

Question 21

What is the Budgeted Cost of Work Performed (BCWP)?

Answer 21

The value earned by the work performed to date

Also known as Earned Value (EV).

Question 22

What does ACWP represent?

Answer 22

Actual Cost of Work Performed

It is calculated based on the contractor’s accounting system records.

Question 23

Define Budget at Complete (BAC).

Answer 23

The baseline plan for the entire effort

It represents the sum of all planned work.

Question 24

What is the Latest Revised Estimate (LRE)?

Answer 24

The most current approximation of what it will cost to complete all work

Often referred to as the Estimate at Completion (EAC).

Question 25

What is the **Performance Measurement Baseline (PMB)**?

Answer 25

The total baseline against which EV is tracked ## Footnote It includes a bucket of money called Undistributed Budget (UB).

Question 26

What is the purpose of **Management Reserve (MR)**?

Answer 26

Covers unanticipated in-scope changes ## Footnote It is set aside by the Program Manager and varies depending on project risk.

Question 27

What does the **Contract Budget Base (CBB)** represent?

Answer 27

PMB plus MR ## Footnote It represents the total cost of the work.

Question 28

What are the **five common methods** to measure Earned Value?

Answer 28

* Milestones * Percent complete * 0/100 * 50/50 * Level of Effort ## Footnote Each method is determined based on the type of work encompassed.

Question 29

What does **Schedule Variance (SV)** measure?

Answer 29

The dollar representation of the difference between BCWP and BCWS ## Footnote It indicates whether the project is ahead or behind schedule.

Question 30

Define **Cost Variance (CV)**.

Answer 30

The difference between BCWP and ACWP ## Footnote A positive CV indicates the project is under cost.

Question 31

What is **Variance at Complete (VAC)**?

Answer 31

The difference between planned cost to complete the work and expected cost to complete the work ## Footnote VAC = BAC - LRE.

Question 32

True or false: A positive **Schedule Variance (SV)** indicates a project is behind schedule.

Answer 32

FALSE ## Footnote A positive SV indicates the project is ahead of schedule.

Question 33

What should analysts focus on when reviewing **variances**?

Answer 33

* Cumulative data points * Current data points * Sudden trend changes ## Footnote Variances over 10% are considered significant and require examination.

Question 34

What is the **0/100 method** used for in performance measurement?

Answer 34

100% of performance is taken when the task is complete ## Footnote Best for very short work packages.

Question 35

What does **Level of Effort (LOE)** measure?

Answer 35

Performance is planned and earned using a straight-line approach ## Footnote It is primarily reserved for more time-related work.

Question 36

What should analysts do regarding **variances** in data?

Answer 36

Review and understand variances, explain and manage them ## Footnote Variances are natural and should not be eliminated.

Question 37

What does a **negative cost variance** indicate?

Answer 37

CPI less than one ## Footnote A CPI of 0.9 means that for every $1.00 spent, the program gets 90 cents worth of work completed.

Question 38

What is the **Cost Performance Index (CPI)**?

Answer 38

The ratio of work performed to cost of performing the work ## Footnote A CPI greater than one corresponds to a positive cost variance.

Question 39

What does the **Schedule Performance Index (SPI)** measure?

Answer 39

The ratio of work performed to work planned ## Footnote An SPI less than one corresponds to a negative schedule variance.

Question 40

What are the **cumulative BCWS**, **BCWP**, and **ACWP** for the aquarium example?

Answer 40

* BCWS: $400 * BCWP: $200 * ACWP: $300 ## Footnote These values help assess project performance.

Question 41

What does a **negative Schedule Variance (SV)** imply?

Answer 41

The project is behind schedule ## Footnote SV is calculated as the difference between BCWP and BCWS.

Question 42

What is the **Variance at Completion (VAC)**?

Answer 42

The difference between the original budget and the latest revised estimate ## Footnote A negative VAC indicates an expected cost overrun.

Question 43

What should be considered when analyzing **percentages** in EV analysis?

Answer 43

* % Planned = BCWS/BAC * % Complete = BCWP/BAC * % Spent = ACWP/BAC ## Footnote These percentages help assess project performance against the budget.

Question 44

What does it indicate if **BCWS = BCWP = ACWP**?

Answer 44

EV is not really being used ## Footnote This situation may occur in Level of Effort (LOE) tasks.

Question 45

What is the **Management Reserve (MR)** used for?

Answer 45

To cover unfavorable cost variances ## Footnote MR should not be used without examining the course of action.

Question 46

What does a **CPI of 0.67** mean?

Answer 46

For every dollar spent, 67 cents of value is received ## Footnote This indicates a negative cost performance.

Question 47

What is the significance of **thresholds** in variance reporting?

Answer 47

Thresholds govern the variance reporting process ## Footnote Common thresholds include percentages and absolute dollars.

Question 48

What should variance reports focus on?

Answer 48

* Where is the variance? * What is the cause? * What is the impact? * What is the Action Plan? ## Footnote These elements help in managing the program effectively.

Question 49

What does a **BAC < 0** indicate?

Answer 49

Should never happen ## Footnote It implies the contractor is going to give money to the government for work performed.

Question 50

What is the purpose of **variance action plans**?

Answer 50

To capture and track necessary actions promptly ## Footnote This ensures the program takes actions to mitigate risks.

Question 51

What does it mean if **percent spent** is much greater than **percent complete**?

Answer 51

The project is significantly overrunning on its cost budget ## Footnote This indicates potential financial issues.

Question 52

What should be done if a contractor expects to build six aquariums next month after building two in one month?

Answer 52

Question how they plan to accomplish this work ## Footnote Analysts should assess the feasibility of the contractor's expectations.

Question 53

What is the **impact of using MR** on project performance?

Answer 53

It can indicate problems if used excessively ## Footnote Graphing MR balance against project metrics helps visualize trends.

Question 54

What does **ACWP > 0 but BCWP = 0** indicate?

Answer 54

Costs incurred without performance ## Footnote This situation should not occur in a well-managed EVMS.

Question 55

What is the **formula for calculating EAC**?

Answer 55

EAC = BAC / CPI ## Footnote This formula helps project future performance based on current metrics.

Question 56

What does a **positive variance** represent?

Answer 56

An area of opportunity ## Footnote Funds could be reallocated to improve project outcomes.

Question 57

What is the **Estimate At Complete (EAC)** used for?

Answer 57

* Identify cost drivers and take corrective action * Ensure contract ceiling and program budget limits are sufficient * Avoid overpaying progress payments ## Footnote EAC is crucial for managing project costs effectively.

Question 58

What are the **two common methods** to project an independent EAC?

Answer 58

* CPI forecast * CPI-SPI forecast ## Footnote These methods utilize past performance data to estimate future costs.

Question 59

The **CPI forecast** assumes what about the cumulative CPI?

Answer 59

It will remain constant throughout the program ## Footnote This is often referred to as the best-case forecast.

Question 60

What does the **CPI-SPI forecast** consider in its calculation?

Answer 60

The schedule ## Footnote This forecast is often referred to as the worst-case forecast.

Question 61

Calculate the **CPI forecast** using the formula: CPI Forecast = ACWP + BCWR / CPI = BAC / CPI. If BAC is 800 and CPI is 0.67, what is the EAC?

Answer 61

1200 ## Footnote This calculation assumes a constant CPI of 0.67.

Question 62

What does **TCPI** stand for?

Answer 62

To-Complete Cost Performance Index ## Footnote TCPI measures the performance required to meet a specific cost target.

Question 63

What is the formula for **TCPIBAC**?

Answer 63

TCPIBAC = BCWR / (BAC – ACWP) ## Footnote This formula helps determine the performance needed to meet the Budget At Completion.

Question 64

If **TCPI** is lower than **CPI**, what does it indicate?

Answer 64

Productivity is expected to be lower in the future ## Footnote This situation requires investigation into potential causes of decreased productivity.

Question 65

If **TCPI** is higher than **CPI**, what does it suggest?

Answer 65

Productivity is expected to increase in the future ## Footnote This may indicate optimistic assumptions about future performance.

Question 66

What is the **CPI-SPI forecast** formula?

Answer 66

CPI - SPI Forecast = ACWP + BCWR / (CPI*SPI) ## Footnote This formula factors in both cost and schedule performance.

Question 67

What is the **significance of graphing EACs** with BAC and LRE?

Answer 67

It adds context to the analysis ## Footnote Graphing trends over time helps visualize performance and forecast accuracy.

Question 68

What does the **LRE** represent?

Answer 68

Latest Revised Estimate ## Footnote LRE includes the contractor’s best estimate and assessment of risk.

Question 69

What is the **best-case EAC** based on the CPI forecast if the BAC is 800 and CPI is 0.67?

Answer 69

1200 ## Footnote This assumes a constant CPI of 0.67.

Question 70

What is the **worst-case EAC** based on the CPI-SPI forecast if SPI is 0.5?

Answer 70

2100 ## Footnote This includes the actuals to date and factors in the schedule performance.

Question 71

What does it mean if **ACWP** exceeds either the **BAC** or **LRE**?

Answer 71

It usually indicates nearing task completion ## Footnote This can also occur due to unprocessed ECPs.

Question 72

What is a major benefit of using **EVM**?

Answer 72

* Improved planning * Objective performance measurement * Accurate forecasting of cost to complete ## Footnote EVM integrates technical scope with schedule and budget for better management.

Question 73

True or false: The **real key to a successful EVMS** is the partnership and dialogue between the government and the contractor.

Answer 73

TRUE ## Footnote This collaboration fosters ownership and responsibility in project success.