PMI-SP Exam - Topic 8 Question 112 Discussion

According to the question, the cost variance of the project is -20, which is a negative

figure. The negative CV depicts that the costs are higher

than planned.

What is CV?

Cost variance (CV) is a measure of cost performance on a project. The variance notifies if costs are

higher than budgeted

or lower than budgeted. The cost variance is calculated based on the following formula:

CV = Earned Value (EV) - Actual Cost (AC)

A positive value means that spending is less than budgeted, whereas a negative value indicates that

costs are higher than

originally planned for the project.

Answer option B is incorrect. This result is drawn when the CV value is positive.

Answer option A is incorrect. If the CV is zero, it shows that spending is right on target.

Answer option C is incorrect. This result is depicted by viewing the schedule variance (SV), not the

CV.

What is SV?

Schedule variance (SV) is a measure of schedule performance on a project. The variance notifies that

the schedule is ahead

or behind what was planned for this period in time. The schedule variance is calculated based on the

following formula:

SV = Earned Value (EV) - Planned Value (PV)

If the resulting schedule is negative, it indicates that the project is behind schedule. A value greater

than 0 shows that the

project is ahead of the planned schedule. A value of 0 indicates that the project is right on target.