hardMultiple ChoiceObjective-mapped
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 is negative, so not under budget; there is no schedule information.
- ✓
The project is over budget
Why this is correct
Negative CV and CPI<1 both indicate the project is over budget.
- ✗
The project is ahead of schedule
Why it's wrong here
CV and CPI measure cost, not schedule.
- ✗
The project is under budget
Why it's wrong here
A negative CV indicates over budget, not under.
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