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PMI Project Management Professional Practice Question

During a project review, the project manager notices that the Actual Cost (AC) for a specific work package is higher than expected. What does this indicate about the project's cost performance?

The project is behind schedule
The project will finish under budget
The project is over budget for the work package
The project scope has increased

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Answer Description

The correct answer is that the project is over budget for the work package. Actual Cost (AC) represents the real costs incurred for the work performed up to a specific point in time. When AC is higher than expected, it indicates the project is spending more money than planned for the completed work in that package.

However, AC alone doesn't provide a complete picture of the project's performance. To fully assess the situation, the project manager should compare AC with other Earned Value Management (EVM) metrics like Planned Value (PV) and Earned Value (EV).

The other answers are incorrect because AC doesn't directly indicate schedule performance, scope changes, or predict future budget performance.

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What is Actual Cost (AC) in project management?

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