You work as a Project Manager for Tech Perfect Inc. Several projects are running under your
supervision. Martha, the team leader of a project, provides you performance indexes of her
project. The cost variance (CV) of her project is -20. What does this figure depict?

A.
Spending is right on target.

B.
Costs are lower than planned.

C.
The project is behind schedule.

D.
Costs are higher than planned.

Explanation:
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.