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CAPM Practice: Explain when it is appropriate to use a predictive, plan-based approach

Question 81 of 85 in Explain when it is appropriate to use a predictive, plan-based approach

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A large infrastructure project is using a predictive approach. The project manager calculates Schedule Variance (SV) = -$500,000 and Cost Variance (CV) = -$200,000 at the 40% completion milestone. What is the MOST important insight these metrics provide?

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Correct answer: The project is behind schedule and over budget, requiring analysis of root causes and corrective action

Explanation

SV = EV - PV; when SV is negative (-$500K), the project has done less work than planned (behind schedule). CV = EV - AC; when CV is negative (-$200K), the project has spent more than the earned value (over budget). Both negative variances are warning signals requiring root cause investigation and corrective action in a predictive framework.

**Why not B:** A negative CV means the project has spent more than the value of work accomplished, not less. CV = EV - AC; when CV is negative, AC exceeds EV, indicating an over-budget condition. This answer reverses the meaning of negative cost variance.

**Why not C:** Earned value metrics measure both cost and schedule performance. SV (Schedule Variance) and SPI (Schedule Performance Index) are earned value metrics specifically designed for schedule analysis. Dismissing EVM's schedule capability is incorrect.

**Why not D:** A negative SV means the project is behind schedule, not ahead. SV = EV - PV; when SV is negative, less work has been earned than was planned, indicating the project is falling behind its schedule baseline.

Key Concept

This question covers Explain when it is appropriate to use a predictive, plan-based approach under Explain when it is appropriate to use a predictive, plan-based approach (Predictive, Plan-Based Methodologies).

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