PK0-003 · Question #455
The EV of a particular project is $6 million. The CV is -$340,000. Which of the following can be determined from this information?
The correct answer is D. The project costs are currently over-budget.. Given an Earned Value (EV) of $6 million and a Cost Variance (CV) of -$340,000, the negative CV indicates that the Actual Cost (AC) is greater than the Earned Value (EV). This means the project is currently over-budget.
Question
The EV of a particular project is $6 million. The CV is -$340,000. Which of the following can be determined from this information?
Options
- AThe project costs are currently under-budget.
- BThe AC is less than the EV.
- CThe EV is higher than the AC.
- DThe project costs are currently over-budget.
How the community answered
(39 responses)- A8% (3)
- B15% (6)
- C3% (1)
- D74% (29)
Why each option
Given an Earned Value (EV) of $6 million and a Cost Variance (CV) of -$340,000, the negative CV indicates that the Actual Cost (AC) is greater than the Earned Value (EV). This means the project is currently over-budget.
A negative CV explicitly means that the actual costs are exceeding the earned value, indicating the project is over-budget, not under-budget.
Since CV = EV - AC and CV is negative (EV - AC < 0), it implies that AC is greater than EV.
As established by the negative CV, the Actual Cost (AC) is greater than the Earned Value (EV), meaning EV is lower than AC.
Cost Variance (CV) is calculated as EV - AC (Earned Value - Actual Cost). A negative CV, in this case -$340,000, indicates that the Actual Cost (AC) is greater than the Earned Value (EV). When AC is greater than EV, it means the project has spent more than the value earned, thus it is over-budget.
Concept tested: Earned Value Management - Cost Variance (CV)
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