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CAPM Practice: Determine how to document project controls of predictive, plan-based projects

Question 57 of 85 in Determine how to document project controls of predictive, plan-based projects

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A project manager is presenting to the project steering committee. The project is 65% complete (by EV), has a CPI of 0.88, and has 3 months remaining. The originally budgeted remaining cost was $240,000. If current CPI continues, what is the forecasted cost to complete (ETC using CPI)?
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Correct answer: $272,727 — remaining work at current CPI of 0.88 (ETC = remaining budget / CPI = $240,000 / 0.88)

Explanation

ETC (using current CPI) = Remaining Planned Work / CPI. If remaining planned cost = $240,000 and CPI = 0.88, then ETC = $240,000 / 0.88 ≈ $272,727. This means even though $240,000 was planned for remaining work, at the current efficiency rate, the project will spend approximately $272,727 to complete that work — a $32,727 additional overrun on top of existing overruns.

**Why not A:** ETC can be calculated without knowing the explicit Actual Cost value when the remaining planned budget and CPI are known. The formula ETC = remaining budget / CPI uses the planned remaining cost and the current efficiency rate. AC is embedded in CPI but is not separately needed for this calculation.

**Why not B:** $211,200 would result from multiplying $240,000 by 0.88, which incorrectly applies CPI as a multiplier. Since CPI < 1.0 means the project is less efficient than planned, the remaining work will cost more, not less. You must divide by CPI, not multiply.

**Why not D:** Using the planned $240,000 assumes the remaining work will be completed at the originally planned efficiency (CPI = 1.0). With a CPI of 0.88, the project is demonstrably less efficient than planned, so assuming planned efficiency for remaining work ignores actual performance data.

Key Concept

This question covers Determine how to document project controls of predictive, plan-based projects under Determine how to document project controls of predictive, plan-based projects (Predictive, Plan-Based Methodologies).

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