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Variance at Completion

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Variance at Completion (VAC) is an EVM metric used to forecast the expected difference between the project's final budget (Budget at Completion) and the estimated cost of the project (Estimate at Completion). It is calculated by subtracting the Estimate at Completion (EAC) from the Budget at Comple…

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PMP - Variance at Completion Example Questions

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Question 1

A development project has an initial budget of $700,000. To date, the actual cost is $350,000 and earned value is $300,000. The expected cost at completion is estimated to be $720,000. What is the Variance at Completion (VAC)?

Correct Answer: -$20,000

Variance at Completion (VAC) is calculated by subtracting the estimate at completion (EAC) from the Budget at Completion (BAC). In this case, the initial budget (BAC) is $700,000 and the expected cost at completion (EAC) is $720,000. So, the VAC is $700,000 - $720,000, which results in -$20,000. This is a negative value, indicating that the project is expected to go over budget. The other options are incorrect as they do not correctly represent this calculation.

Question 2

You are managing a software development project where the original budget is $200,000. To date, your team has spent $100,000, and the work completed so far is worth $80,000. Calculate the Variance at Completion (VAC) if the project is expected to be completed for $250,000.

Correct Answer: - $50,000

To calculate the Variance at Completion (VAC), we need to use the following formula: VAC = Budget at Completion (BAC) - Estimate at Completion (EAC) Given: - Original budget (BAC) = $200,000 - Amount spent to date = $100,000 - Value of work completed = $80,000 - Estimate at Completion (EAC) = $250,000 Now, let's calculate the VAC: VAC = BAC - EAC VAC = $200,000 - $250,000 VAC = -$50,000 Therefore, the Variance at Completion (VAC) is -$50,000, which means the project is expected to be over budget by $50,000 at completion. The correct answer is: -$50,000.

Question 3

An engineering project has a budget of $250,000. The current actual cost is $100,000, and the earned value is $80,000. The project is expected to cost $275,000 at completion. Calculate the Variance at Completion (VAC) for this project.

Correct Answer: -$25,000

Variance at Completion (VAC) is a projection of the budget overruns or underruns. It is calculated as Budget at Completion (BAC) minus Estimate at Completion (EAC). Here, BAC is the original budget, $250,000, and EAC is the expected cost at completion, $275,000. So, VAC equals $250,000 - $275,000 which equals -$25,000. This negative value indicates the project is over budget. The rest of the answers are incorrect because they do not correctly calculate the Variance at Completion.

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