Performance Evaluation

Correct Answer: It implies that the project will end over budget if no corrective actions are taken. You should take immediate corrective measures to control cost.

A positive trend analysis in EVM implies that the project is proceeding well in terms of schedule but the negative Variance At Completion (VAC) means the project is predicted to end over budget. Even though a positive trend analysis is a good sign, the negative VAC hints at a cost overrun if no interventions are done. Therefore, immediate corrective measures are needed to control costs and ensure that the project is successfully completed within budget. The other answers are incorrect. The second option incorrectly assumes that the project is under budget which contradicts the implication of a negative VAC. The third option ignores the serious cost implications of a negative VAC, assuming that a positive trend analysis alone guarantees project success. The fourth option recommends prematurely stopping the project due to negative variance without considering possible corrective measures that could bring the project back on budget.

Correct Answer: The project is behind schedule

The Schedule Performance Index (SPI) of 0.85 indicates that the project is behind schedule. Here's why:

In Earned Value Management (EVM), the SPI is calculated by dividing the Earned Value (EV) by the Planned Value (PV).

SPI = EV / PV

An SPI of 1.0 means the project is exactly on schedule.
An SPI greater than 1.0 indicates the project is ahead of schedule.
An SPI less than 1.0 indicates the project is behind schedule.

With an SPI of 0.85, which is less than 1.0, it clearly shows that the project is behind schedule. Specifically, it means the project has only completed 85% of the work that was planned to be completed by this point in time.

The other options are incorrect:

The project being 85% complete is not related to the SPI value. The SPI doesn't indicate overall project completion, but rather the efficiency of the schedule.

The project cannot be ahead of schedule with an SPI less than 1.0.

The SPI doesn't provide information about cost performance. That would be indicated by the Cost Performance Index (CPI) instead.

Correct Answer: The project is over budget

A Cost Performance Index (CPI) of 0.85 indicates that the project is over budget. The CPI is a measure of cost efficiency in a project. It is calculated by dividing the Earned Value (EV) by the Actual Cost (AC). A CPI value less than 1.0 indicates that the project is spending more money than planned for the work completed. When CPI = 0.85, it means that for every dollar spent, the project is only earning $0.85 in value. This clearly shows that the project is overspending and thus over budget. The other options are incorrect: - The project is not under budget and performing efficiently, as a CPI below 1.0 indicates inefficiency in cost management. - The project is not exactly on budget as planned. If it were, the CPI would be 1.0. - While the project might be ahead of schedule (which we cannot determine from the CPI alone), it is definitely experiencing cost overruns, not just potentially experiencing them. In project management, a CPI of 0.85 would typically trigger corrective actions to bring the project's cost performance back on track.