PK0-003 · Question #240
In month nine of a 12 month project, the customer approaches the project manager believing the project is at risk because 85% of the funds have been expended already. To give the customer a more accur
The correct answer is D. CV = EV - AC. To accurately assess cost performance, a project manager calculates the Cost Variance (CV) by subtracting the Actual Cost (AC) from the Earned Value (EV).
Question
In month nine of a 12 month project, the customer approaches the project manager believing the project is at risk because 85% of the funds have been expended already. To give the customer a more accurate assessment, the project manager calculates the Cost Variance (CV) using which of the following formulas?
Options
- ACV = PV - AC
- BCV = AC - EV
- CCV = EV - PV
- DCV = EV - AC
How the community answered
(29 responses)- A3% (1)
- B7% (2)
- C3% (1)
- D86% (25)
Why each option
To accurately assess cost performance, a project manager calculates the Cost Variance (CV) by subtracting the Actual Cost (AC) from the Earned Value (EV).
CV = PV - AC is an incorrect formula; it mixes Planned Value with Actual Cost without considering Earned Value, which is crucial for cost performance.
CV = AC - EV is an incorrect formula; it calculates the inverse of the standard Cost Variance, which would make an over-budget situation appear positive.
CV = EV - PV calculates Schedule Variance (SV), which measures schedule performance, not cost performance.
Cost Variance (CV) measures the difference between the earned value (the value of the work performed) and the actual cost incurred. A positive CV indicates that the project is under budget, while a negative CV signifies that it is over budget. This formula provides a direct measure of cost performance relative to the work accomplished.
Concept tested: Earned Value Management - Cost Variance (CV)
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