## Reply: A question on ETC

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## Topic History of : A question on ETC

Max. showing the last 6 posts - (Last post first)
6 years 2 months ago #11423

Tracy Shagnea, PMP

Hi Puneet,

Can any one explain, why PV= 250,000X2 = 500,000

The planned spending is \$250,000 every 3 months. Since the calculation is taking place at the end of 6 months, then the PV is for 2 time periods, which yields 2 x \$250,000 = \$500,000

SPI is not considered in below calculation

Because the question does not indicate that a deadline exists for completion, we would not use SPI, hence the EAC= BAC/(SPI* CPI) formula is not appropriate for this particular scenario. It will yield a much higher cost. The question is a wee bit tricky, since they do give you enough information to calculate the SPI, even though it is not needed for the given scenario.

I hope this helps!

Regards,

Tracy
6 years 2 months ago #11409

Puneet Maheshwari

Hi

Can any one explain, why PV= 250,000X2 = 500,000 and SPI is not considered in below calculation.

I tried to use formula EAC= BAC/(SPI* CPI)

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Question: You are working on a 12 month assignment to build a website with 4,000 pages for \$1,000,000. You are supposed to spend \$250,000 every 3 months. After 6 months, you determine that only \$400,000 of work is completed and cost incurred is \$800,000. What is the ETC?

Choice 1. \$2,000,000

Choice 2. \$1,500,000

Choice 3. \$1,000,000

Choice 4. \$1,200,000

Correct Choice: 4

Justification

The default value of EAC (assuming current variances are typical) is calculated as below:

CPI = EV/AC
CPI = \$400,000 / \$800,000
CPI = 0.5

EAC = BAC/CPI
EAC = \$1,000,000/0.5
EAC = \$2,000,000

So, ETC = EAC – AC = \$2,000,000 – \$800,000 = \$1,200,000