George is the project manager of the NHQ Project and has a budget of $778,000. The project is
scheduled to last for one year with an equal amount of work completed each quarter. The second
quarter of the project has ended and George has spent $325,000 but has only finished forty
percent of the project. Management needs a variance report for the project schedule. What value
should George report in this instance?

A.
.96

B.
-$77,800

C.
$-34,500

D.
-$13,800

Explanation:
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. The earned value in this instance is forty percent of the project
budget, $778,000, and the planned value is $398,000 because George is to be fifty percent done
at the end of the second quarter, as the work is spread evenly across all quarters. The schedule
variance is -$77,800 for the project.
Answer option A is incorrect. .96 represents the cost performance index.
Answer option C is incorrect. -$34,500 represents the project’s variance at completion if the
project continues as is.
Answer option D is incorrect. -$13,800 is the cost variance for the project.