A project manager is reviewing project performance.
Which of the following would be the BEST indicator of the total project cost?
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A. B. C. D.B.
In project management, there are several metrics used to track project performance and to monitor the project's overall cost. To determine the total project cost, the project manager should consider the following indicators:
A. Actual Cost (AC): Actual Cost is the total cost incurred to date for completing the work performed on the project. It includes all the costs associated with the project, such as labor costs, material costs, and overhead costs. However, AC alone is not the best indicator of the total project cost because it only provides information on the cost incurred up to a particular point in time.
B. Estimate at Completion (EAC): EAC is a forecast of the total cost of the project based on the actual performance to date and an estimate of the remaining work. EAC considers the actual cost incurred to date, the budgeted cost of the remaining work, and any additional costs that may arise due to unforeseen circumstances. EAC is a better indicator of the total project cost because it takes into account the cost of the remaining work and any additional costs that may arise.
C. Cost Performance Index (CPI): CPI is the ratio of the earned value (EV) to the actual cost (AC) incurred to date. EV is the measure of the value of the work completed, and AC is the actual cost incurred to date. CPI measures the efficiency of the project in terms of cost. A CPI value of greater than 1 indicates that the project is under budget, while a CPI value of less than 1 indicates that the project is over budget. CPI is not the best indicator of the total project cost because it does not consider the cost of the remaining work.
D. Estimate to Complete (ETC): ETC is the estimated cost required to complete the remaining work on the project. ETC considers the budgeted cost of the remaining work and any additional costs that may arise due to unforeseen circumstances. ETC is a better indicator of the total project cost because it takes into account the cost of the remaining work and any additional costs that may arise.
Therefore, the best indicator of the total project cost would be B. Estimate at Completion (EAC) as it considers the actual cost incurred to date, the budgeted cost of the remaining work, and any additional costs that may arise.