A project manager is using Earned Value Management to assess a project's performance. The Budget at Completion (BAC) is $500,000, and the current Cumulative Cost Performance Index (CPI) is 0.8. Assuming the current performance trend continues, what is the Estimate at Completion (EAC)?
The correct answer is $625,000. When using the formula EAC = BAC / Cumulative CPI, we divide the Budget at Completion ($500,000) by the Cumulative CPI (0.8). This calculation assumes that the current performance trend will continue for the remainder of the project. In this case, $500,000 / 0.8 = $625,000. This method is often used when past performance is indicative of future results. It's important to note that this is different from the bottom-up ETC method, which would require detailed estimates for remaining work.
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