CAPM - Predictive, Plan-Based Methodologies (17% of the exam) - Section 2.4

Interpret project performance using earned value basics, including schedule and cost variance, to support project controls and change management.

Interpret earned value measures - planned value, earned value, and actual cost - to compute schedule variance and cost variance and judge whether a project is ahead or behind, over or under budget. Recognise that a negative cost variance signals overspend, that integrated change control governs baseline changes, and that performance reports drive corrective action.

Earned valueSchedule varianceCost varianceIntegrated change controlProject controls

Practice question for this objective

Free samplePredictive, Plan-Based Methodologieshard

The Ashford Interchange project reports earned value of 250,000 pounds, planned value of 300,000 pounds, and actual cost of 275,000 pounds at the monthly review. Which statement correctly interprets both the schedule variance and the cost variance together?

AThe project is ahead of schedule and under budget, so no corrective action is needed.
BThe project is behind schedule but under budget by 25,000 pounds against the plan.
CThe project is over budget but ahead of schedule by 50,000 pounds against the plan.
DThe project is behind schedule by 50,000 pounds and over budget by 25,000 pounds. Correct

A negative schedule variance means behind schedule and a negative cost variance means over budget, read together for controls. Schedule variance of earned value minus planned value gives minus 50,000 pounds and cost variance of earned value minus actual cost gives minus 25,000 pounds, so both are negative, placing the project behind schedule and over budget at the same review.

Why A is wrong: This flips the sign of both variances; earned value sits below both planned value and actual cost, so the project is behind schedule and over budget, not ahead and under.

Why B is wrong: The schedule reading is right but the cost reading is reversed; actual cost of 275,000 exceeds earned value of 250,000, so cost variance is minus 25,000 pounds, meaning over budget rather than under.

Why C is wrong: The cost reading is right but the schedule reading is reversed; earned value of 250,000 is below planned value of 300,000, so schedule variance is minus 50,000 pounds, meaning behind schedule rather than ahead.

Why D is correct: Schedule variance is earned value minus planned value, 250,000 minus 300,000, giving minus 50,000 pounds behind; cost variance is earned value minus actual cost, 250,000 minus 275,000, giving minus 25,000 pounds over, so both variances are negative.

See more CAPM practice questions, answers explained.

Exam traps in Predictive, Plan-Based Methodologies

Answers that look right on this material and are not. Each one is a distractor from a different question in the CAPM bank for this domain.

Ahead of schedule, having completed 20,000 dollars more work than was planned by this date.
Why it is wrong: This flips the subtraction to planned value minus earned value and treats the result as a lead; earned value is below planned value here, so the project has done less work than planned, not more.
The schedule variance is plus 12,000 pounds, which means the project is ahead of schedule at this reporting date.
Why it is wrong: This reverses the subtraction; schedule variance is earned value minus planned value, so the sign is negative, and an ahead-of-schedule reading is the opposite of the true position.
It is under budget, having spent 30,000 pounds less than the value of the work completed.
Why it is wrong: This reverses the subtraction to actual cost minus earned value and reads the negative result as a saving; a negative cost variance signals an overrun, not an underrun.

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