TOPIC: Free PMP® Exam Sample Question of the Week

Hello everyone! Here is this week's free PMP® exam sample question from the PM Exam Simulator

You are managing a renovation project of a vintage house which is to be completed in 12 months on a budget of $100,000. You are 6 months into the project, and you have spent $60,000, but only 40% of the work is completed. How much more will it cost to complete the renovation if the cost performance remains unchanged?

A. $171,940
B. $120,000
C. $149,254
D. $89,254

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HINT: Determining how much more it will cost to finish the project is the ETC.

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Answer and Explanation:
The correct answer is D.

The total budget or BAC is $100,000. The cost so far or AC is $60,000. You have completed 40% of the work which is the EV or 40% of $100,000 or $40,000. The question is asking for the cost to complete the renovation or the ETC. The remaining calculations are as follows:
ETC = EAC - AC
EAC = BAC / CPI
CPI = EV / AC or 40,000 / 60,000 = 0.67
EAC = 100,000 / 0.67 = 149,254
ETC = 149,254 - 60,000 = 89,254 or the cost required to complete the renovation.

A. $171,940
Incorrect. The question is looking for the ETC or the cost required to complete the project. This value represents the EAC using the formula
EAC = AC +[(BAC - EV) / (CPI x SPI)].

B. $120,000
Incorrect. The question is looking for the ETC or the cost required to complete the project. This value represents the EAC using the formula
EAC = AC + BAC - EV.

C. $149,254
Incorrect. The question is looking for the ETC or the cost required to complete the project. This value represents the EAC using the formula
EAC = BAC / CPI.

D. $89,254
Correct. The cost required to complete the project is $89,254. The value was derived using ETC = EAC - AC utilizing the formula EAC = BAC / CPI to calculate EAC.

Reference: A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Page(s) 267

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