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PK0-005 Practice Question: During a project status meeting, a stakeholder…
During a project status meeting, a stakeholder requests a report showing the variance of actual costs from the planned budget. Which metric should the project manager include?
⚠ Common exam trap
It's easy for candidates to confuse Cost Performance Index (CPI) with Cost Variance (CV), but CPI is a ratio (efficiency metric) while CV is an absolute dollar variance, and the question explicitly asks for a variance, not a ratio.
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
✓
Cost variance (CV)
Cost variance (CV) is the direct measure of the difference between the earned value (EV) and the actual cost (AC), showing exactly how actual costs deviate from the planned budget. Since the stakeholder specifically requests a report on variance of actual costs from the planned budget, CV is the correct metric. CV = EV - AC, where a negative value indicates overspending.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Cost variance (CV)
Why this is correct
Cost variance compares actual costs against the planned budget, calculated as earned value minus actual cost, so it directly quantifies budget deviation. Reporting CV gives the stakeholder the requested variance figure for the project's cost performance.
- ✗
Schedule performance index (SPI)
Why it's wrong here
SPI divides earned value by planned value, measuring schedule efficiency against time, not cost deviation from budget. It is tempting because it is a core earned value metric often reported alongside cost figures, but it would be correct only for a question about schedule performance.
- ✗
Cost performance index (CPI)
Why it's wrong here
CPI is a ratio of earned value to actual cost, expressing cost efficiency as an index rather than the absolute variance the stakeholder requested. It is tempting because CPI also concerns cost performance, and it would be the right metric if the question asked how efficiently each pound was spent.
- ✗
Schedule variance (SV)
Why it's wrong here
Schedule variance compares earned value against planned value in cost or time units, measuring schedule slippage rather than budget deviation. It is tempting because both metrics share the variance label, but SV answers a timing question, whereas cost variance addresses the stakeholder's budget concern.
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