hardMultiple Choice
PK0-005 Practice Question: A project manager calculates the cost variance…
A project manager calculates the cost variance (CV) as -$5,000 and the cost performance index (CPI) as 0.9. What does this indicate about the project?
⚠ Common exam trap
Test-takers frequently confuse cost performance metrics (CV, CPI) with schedule performance metrics (SV, SPI), leading them to incorrectly infer schedule status from cost data alone.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
The project is over budget
A negative cost variance (CV) of -$5,000 means the project has spent $5,000 more than the value of work performed, indicating a cost overrun. A cost performance index (CPI) of 0.9 confirms that for every dollar spent, only $0.90 of earned value is being received, which is a clear sign of being over budget. Therefore, the project is over budget, making option B correct.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
The project is under budget and behind schedule
Why it's wrong here
CV and CPI measure cost only; schedule status requires schedule variance or SPI, neither supplied. The negative CV and CPI of 0.9 indicate over-budget spending, and no schedule data supports the behind-schedule claim, so the option asserts an unsupported condition.
- ✓
The project is over budget
Why this is correct
A negative cost variance means actual cost exceeds earned value, and a CPI below 1.0 confirms each dollar spent returns less than a dollar of value. Both indicators together show spending has outpaced progress, satisfying the stem's over-budget conclusion.
- ✗
The project is ahead of schedule
Why it's wrong here
Schedule position derives from schedule variance or the schedule performance index, which the stem does not provide. CV and CPI address cost efficiency exclusively, so a negative CV and CPI of 0.9 cannot establish that the project is ahead of schedule.
- ✗
The project is under budget
Why it's wrong here
A negative cost variance of -$5,000 with a CPI of 0.9 means costs exceed the budgeted value for work performed, so the project is over budget. The option inverts the sign convention: positive CV and CPI above 1.0 indicate under-budget performance.
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