Question

You are evaluating your 89,000 project. The project is estimated to take six months and you have completed month two. After reviewing invoices, you determined that the paid-to-date amount is 27,000. The budget has been allocated as follows:

Month 1: 4,000
Month 2: 12,000
Month 3: 23,000
Month 4: 25,000
Month 5: 15,000
Month 6: 10,000

Which statement is most accurate?
1) The project is ahead of schedule
2) The project is over-budget
3) The project is behind schedule
4) The variance at completion is negative

Answer 1

The project is over-budget after two months with actual expenditures of $27,000 compared to a planned budget of $16,000.

Step-by-step explanation:

To evaluate the status of the project after two months, we should compare the planned budget with the actual expenditure at this point. By the end of month two, the planned budget was $4,000 for the first month and $12,000 for the second month, totalling $16,000. However, the paid-to-date amount is $27,000, which exceeds this planned amount by $11,000. This indicates that the project is over-budget. No information provided about the work progress itself in relation to the schedule, so we cannot accurately determine if the project is ahead or behind schedule just based on the budget. Furthermore, without details on the planned versus actual performance or completion metrics, we cannot conclude on the variance at completion.