A CPI less than 1.0 indicates the project is over budget (cost overrun). An SPI greater than 1.0 indicates it is ahead of schedule. These are independent measures. Being ahead of schedule does not justify or explain a cost overrun; the root cause of spending more than planned for the work accomplished must be investigated.

Formal documentation and communication are the critical first steps following an approved change. The change log is the official record, and notifying the team ensures everyone is working from the same information. Updating the baseline (A) is essential but typically follows formal documentation. Revised forecasts (C) and detailed impact analyses (D) are important subsequent steps based on the documented change.

The formula EAC = AC + [(BAC – EV) / (CPI * SPI)] is used when past performance indicates that both cost efficiency (CPI) and schedule efficiency (SPI) will impact the performance on the remaining work. It’s a more pessimistic forecast that accounts for the compounding effect of being behind schedule (which often increases costs) and being over budget.

A Class 3 estimate (conceptual or budget authorization) typically has an expected accuracy range of -10% to +15%. Parametric modeling, using statistical relationships and historical data from similar projects, is a standard and appropriate method for this class. Detailed unit cost (A) is for Class 1. Capacity factoring (C) is more suited to Class 4/5. Vendor quotes (D) contribute to a Class 2 or 1 estimate.

The fundamental purpose of a WBS is to deliver a hierarchical, product-oriented decomposition of the total scope of work to be carried out by the project team. It is a scope management tool first. While it is used as a foundation for scheduling (A), responsibility assignment (B), and control accounts (D), these are applications of the WBS, not its primary purpose.

This is a classic incentive/penalty (or award/fee) clause. It provides a financial incentive for early completion (a bonus) and a financial disincentive for late completion (a penalty). Liquidated damages (A) typically involve only penalties for delay, not bonuses for early completion. The other options do not accurately describe the two-way financial mechanism.

Expected Monetary Value (EMV) is calculated as Probability (%) * Impact (cost). For contingency analysis, this quantified risk (0.40 * 0.20 = 0.08 or 8% of the material cost) should be included in the contingency reserve. Contingency is for known-unknowns with probabilistic outcomes. Ignoring it (C) is poor practice, and adding the full impact (A or D) is overly conservative and misallocates reserves.

The core issue is the lack of formal change management. A robust change management process requires that changes, once identified, are evaluated, priced, approved via a written change order, and then implemented. Relying on informal communications (email) without formal approval leaves the contractor vulnerable to uncompensated work and the owner vulnerable to scope creep and disputes.

The formula TCPI = (BAC – EV) / (BAC – AC) calculates the cost performance efficiency that must be achieved on the remaining work in order to meet the original Budget at Completion (BAC). It answers the question, ‘Given our current cost situation (AC and EV), how efficiently must we use our remaining funds (BAC – AC) to finish the remaining work (BAC – EV) on the original budget?’

A CPI less than 1.0 indicates the project is over budget (cost overrun). An SPI greater than 1.0 indicates it is ahead of schedule. These are independent measures. Being ahead of schedule does not justify or explain a cost overrun; the root cause of spending more than planned for the work accomplished must be investigated.0