PMP Exam Dumps | A project manager is performing earned value management (EVM) for a cross-country pipeline project. The

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Question 121/171

A project manager is performing earned value management (EVM) for a cross-country pipeline project. The project manager has determined the ratio of earned value (EV) to actual cost (AC) for the project and has found the calculated result to be 0.9024.
What does this value mean for the project?

A. The project has started exceeding the planned cost.

B. The project is earning less value an was planned.

C. The project is close to exceeding the planned cost.

D. The project has earned more value than planned.

Correct Answer: C

Explanation
According to the PMBOK Guide, the ratio of earned value (EV) to actual cost (AC) is called the cost performance index (CPI). The CPI measures the cost efficiency of the project work. A CPI of 1 means that the project is on budget, a CPI greater than 1 means that the project is under budget, and a CPI less than 1 means that the project is over budget. In this question, the CPI is 0.9024, which means that the project is spending more than it is earning. This indicates that the project is close to exceeding the planned cost, and corrective actions may be needed to control the cost performance. References: PMBOK Guide, 6th edition, pages 267,
268, 269.

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