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AACE International CCP Exam - Topic 1 Question 17 Discussion
Topic #: 1
A major theme park is expanding the existing facility over a five-year period. The design phase will be completed one year after the contract is awarded. Major engineering drawings will be finalized two years after the design contract is awarded and construction will begin three years after the award of the design contract. New, unique ride technology will be used and an estimate will need to be developed to identify these costs that have no historical data.
The following question requires your selection of CCC/CCE Scenario 26 (2.5.50.1.2) from the right side of your split screen, using the drop down menu, to reference during your response/choice of responses.
Select the statement that best describes the method to estimate the cost of the new rides:
The problem provides key metrics used in Earned Value Management (EVM):
Earned Value (EV): $1,500,000
Actual Cost (AC): $1,000,000
Planned Value (PV): $2,000,000
Key Points:
Schedule Performance Index (SPI):
SPI = EV / PV = $1,500,000 / $2,000,000 = 0.75
An SPI less than 1 indicates the project is behind schedule.
Cost Performance Index (CPI):
CPI = EV / AC = $1,500,000 / $1,000,000 = 1.5
A CPI greater than 1 indicates the project is under budget.
Conclusion: The correct answer is C. Project is behind schedule, but under budget because the SPI indicates a delay in schedule, and the CPI shows that the project is currently spending less than planned.
Glen
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