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EVA - spike in actual cost

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lingeswaran.r
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Joined: Sat Apr 18, 2020 11:22 am

EVA - spike in actual cost

Thu May 14, 2020 4:17 am

Hi Manish, Saket,

A project team member runs an earned value analysis (EVA) report. There is an unexpected spike in actual costs over the last three weeks. The team member shows the report to the project manager and based on her analysis presents four possible reasons for the spike. Which reason is most probable?

A. Soaring steel prices have impacted the fixed price with economic price adjustment procurement contracts
B. Thee was a strike at the loading dock which delayed many needed steel shipments until today
C. Fewer employees are showing up for work the past two weeks causing a backlog of unfinished work
D. Much Higher than expected quarterly bonuses were given to executives during that three week period

Answer is A

Analysis - I have selected option A, however have 2 questions

1) I have a feeling that option D also directly having impact in cost, so why not option D?
2) Option B and C can be ignored because it is not directly impacting the cost, hope this is correct reason to reject these options?
manishpn
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Posts: 2862
Joined: Sat Jan 04, 2014 3:55 pm

Re: EVA - spike in actual cost

Thu May 14, 2020 6:08 pm

lingeswaran.r wrote:
Thu May 14, 2020 4:17 am
Hi Manish, Saket,

A project team member runs an earned value analysis (EVA) report. There is an unexpected spike in actual costs over the last three weeks. The team member shows the report to the project manager and based on her analysis presents four possible reasons for the spike. Which reason is most probable?

A. Soaring steel prices have impacted the fixed price with economic price adjustment procurement contracts
B. Thee was a strike at the loading dock which delayed many needed steel shipments until today
C. Fewer employees are showing up for work the past two weeks causing a backlog of unfinished work
D. Much Higher than expected quarterly bonuses were given to executives during that three week period

Answer is A

Analysis - I have selected option A, however have 2 questions

1) I have a feeling that option D also directly having impact in cost, so why not option D?
2) Option B and C can be ignored because it is not directly impacting the cost, hope this is correct reason to reject these options?
I am not sure if A is the right option,
if you know the concept of EPZ the impact is generally not short term, and this type of contract is used for long duration projects where price fluctuations cannot be predicted for long duration.
While A can be an option, but I would have chosen D as it looks more of a short term / one time phenomenon
Br,
Manish P
PMP, PMI - ACP, SAFe Agilist
http://www.izenbridge.com/blog/7-effect ... ification/

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