CAPMMedium

CAPM Practice: Explain when it is appropriate to use a predictive, plan-based approach

Question 71 of 85 in Explain when it is appropriate to use a predictive, plan-based approach

Pick an answer below — you'll get the explanation instantly, no signup.

A predictive project is 75% complete and performing well against the baseline. The project manager calculates the Estimate at Completion (EAC) and finds it is significantly higher than the Budget at Completion (BAC). What does this indicate?

Show answer & explanation

Correct answer: The project is expected to exceed its budgeted cost

Explanation

EAC (Estimate at Completion) represents the expected total cost of the project based on current performance. When EAC > BAC (Budget at Completion), the project is forecasted to overrun its budget. This is a critical warning signal that requires management attention and corrective action to either find cost savings or obtain additional funding authorization.

**Why not A:** If EAC is significantly higher than BAC, this indicates cost overruns are expected, not faster completion of remaining work. An EAC exceeding BAC reflects unfavorable cost performance, not schedule acceleration.

**Why not B:** An EAC higher than BAC means the project will cost more than originally budgeted, which is the opposite of performing better on cost. Better-than-planned cost performance would produce an EAC lower than BAC.

**Why not C:** EAC compared to BAC is a cost metric, not a schedule metric. Being ahead of schedule would be indicated by SPI > 1.0 or positive SV, not by the relationship between EAC and BAC.

Key Concept

This question covers Explain when it is appropriate to use a predictive, plan-based approach under Explain when it is appropriate to use a predictive, plan-based approach (Predictive, Plan-Based Methodologies).

All 1,500+ CAPM questions are free