You work as a project manager working for Mail House King. Your company processes orders for several mail-order catalog ozganizations. Your project is to install new mail-sorting equipment and software. You’ve had some problems and experienced some variances during the project. You expect these variances to continue throughout the life of the project and expect they will be similar to the variances you’ve experienced so far. You know the following information: PV = 900, BAC = 1400, EV = 925, AC = 925. Which of the following is the accurate ETC given the circumstances?
The formula for ETC when variances are expected to continue is ETC = (BAC – EV) ÷ CPI. First you need to calculate CPI, which is $925 ÷ $925 = $1. Now you can plug in the numbers: ($1,400 – $925) ÷ 1 = $475.