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PMP Process — Managing Technical Aspects Practice Question

Your project is a construction project with a fixed price contract. At the 40% progress point, earned value (EV) is $400,000, actual cost (AC) is $480,000, and planned value (PV) is $500,000. What does this indicate?

⚠ Common exam trap

Many exam-takers confuse the relationship between EV and PV for schedule performance and EV and AC for cost performance, mistakenly thinking that if AC is less than PV the project is under budget, when in fact budget status is determined by comparing AC to EV.

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 behind schedule and over budget

The project is behind schedule because the earned value (EV) of $400,000 is less than the planned value (PV) of $500,000, resulting in a schedule performance index (SPI) of 0.80. It is over budget because the actual cost (AC) of $480,000 exceeds the earned value (EV) of $400,000, yielding a cost performance index (CPI) of 0.83. Both SPI and CPI below 1.0 confirm the project is underperforming in terms of schedule and cost.

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 behind schedule and over budget
Why this is correct
If the Schedule Performance Index (SPI) is less than 1, it signifies that the Earned Value (EV) is less than the Planned Value (PV), meaning less work has been completed than originally scheduled by this point. Concurrently, if the Cost Performance Index (CPI) is less than 1, it indicates that the Earned Value (EV) is less than the Actual Cost (AC), meaning the actual cost incurred for the work performed exceeds the budgeted cost for that work. Therefore, both conditions together accurately describe a project that is behind schedule and over budget, reflecting unfavorable performance in both dimensions.
✗
The project is ahead of schedule and under budget
Why it's wrong here
This statement contradicts the unfavorable nature of both SPI < 1 and CPI < 1. For a project to be ahead of schedule, the Schedule Performance Index (SPI) would need to be greater than 1, indicating more work has been completed than planned. Similarly, for a project to be under budget, the Cost Performance Index (CPI) would need to be greater than 1, showing that the actual costs incurred are less than the budgeted costs for the work accomplished. Since the given metrics are both less than 1, this option is incorrect.
✗
The project is behind schedule but under budget
Why it's wrong here
While an SPI less than 1 correctly indicates the project is behind schedule, the claim of being "under budget" is incorrect when the Cost Performance Index (CPI) is less than 1. A CPI value below 1 specifically means that the actual cost incurred for the work completed (AC) is greater than the earned value (EV), signifying a cost overrun or being over budget. To genuinely be under budget, the CPI would unequivocally need to be greater than 1, demonstrating cost efficiency.
✗
The project is ahead of schedule but over budget
Why it's wrong here
This option incorrectly states the project is "ahead of schedule." An SPI value less than 1 unequivocally means that the project has completed less work than planned by the current date, thus it is behind schedule, not ahead. Although the "over budget" part aligns with a CPI less than 1, the schedule performance aspect of this statement is fundamentally contradicted by the given SPI metric, rendering the entire statement false.

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PMP Process — Managing Technical Aspects Practice Question

Why each option matters

Option-by-option breakdown

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