Actual Cost (AC)

Correct Answer: AC measures the cost spent to complete work that produces project deliverables

Actual Cost (AC) specifically measures the costs that have been incurred for work that has been performed and produced project deliverables. It represents the real money spent on completed work. Here's why this is correct and others are wrong: The correct answer precisely defines AC as costs spent on completed work that produces deliverables. This aligns with PMI's definition of AC in earned value management. Other options are incorrect because: - Including administrative overhead and future planned expenses goes beyond AC's scope, as AC only includes costs already incurred - Total approved budget at completion is actually the Budget at Completion (BAC), not AC - Including anticipated costs for planned deliverables is incorrect as AC only includes actual spent money, not future or planned costs AC is a critical metric in earned value management that focuses solely on what has been actually spent on work that has been performed, making it a key measure of project cost performance.

Correct Answer: AC represents the cumulative cost incurred to complete work during a specific time period

Actual Cost (AC) is a key project management metric that represents the total cost actually incurred and recorded for accomplishing work during a specific period. This is correct because: - AC measures real, incurred costs - It is time-period specific - It reflects completed work - It represents actual expenditures, not forecasts or calculations The other options are incorrect because: - Including management reserves and contingencies relates to budget planning, not actual costs - Total budgeted cost at completion plus CPI adjustments is a different metric entirely - The formula involving PV, EV, and SPI is not related to actual cost calculation AC is one of the fundamental metrics in Earned Value Management (EVM) and must be based on actual expenditures, not calculations or estimates. It provides a clear picture of how much money has been spent on work performed during a specific timeframe.

Correct Answer: Calculate AC by multiplying labor hours by their respective shift rates

The most appropriate method for calculating Actual Cost (AC) in a construction project with varying shift rates is to multiply labor hours by their respective shift rates. This method is correct because: - It accounts for the actual cost variations between different shifts - It provides the most accurate representation of true labor costs - It maintains precise cost control and tracking - It aligns with project accounting best practices The other options are incorrect because: - Using an average rate across all shifts would distort actual costs and lead to inaccurate reporting - Applying the highest shift rate to all hours would artificially inflate project costs and misrepresent actual spending - Waiting until project completion to apply overtime premiums would delay accurate cost tracking and impede proper project monitoring