Jack works as a project manager for the NHQ project. His project has a budget of $2,208,456 and is scheduled to last for three years. His project is currently forty percent complete though it should be forty- five percent complete. In order to reach this point of the project, he has spent $725,000. Management needs a performance report regarding the NHQ project. Management is concerned that this project will be over budget upon completion. Management would like to create a report telling them how much more the project will need to complete. What value should Jack tell the management?
Correct Answer: A
Explanation/Reference:
Explanation:
The project will need $1,087,497.74 more to complete. This formula, the estimate to complete, is estimate at completion minus the actual costs. Here, CPI = EV/AC
= (0.40*2,208,456)/725,000
= 1.21846, and
ETC = EAC - AC
= (BAC/CPI) - AC
= (2,208,456/1.21846) - 725,000
= 1,812,497.74 - 725,000
= 1,087,497.74
The estimate to complete (ETC) is the expected cost needed to complete all the remaining work for a scheduled activity, a group of activities, or the project. ETC helps project managers predict what the final cost of the project will be upon completion. The formula for the ETC is EAC- A The EAC is BAC/CPI.