Basic Formula

CV – SV – CPI – SPI
If earned value (EV) = 350, actual cost (AC) = 400, and planned value (PV) = 325, what is cost variance (CV)?
A. 350
B. -75
C. 400
D. -50

Answer D
Explanation
The formula is:
CV= EV - AC
CV= 350 – 400
CV -50
Cost performance index (CPI) of 0.89 means:
A. At this time, we expect the total project to cost 89 percent more than planned.
B. When the project is completed, we will have spent 89 percent more than planned.
C. The project is progressing at 89 percent of the rate planned.
D. The project is getting 89 cents out of every dollar invested.

Answer D
Explanation
The CPI is less than one, so the situation is bad. The project is only getting 89 cents out of every dollar invested.
A schedule performance index (SPI) of 0.76 means:
A. You are over budget.
B. You are ahead of schedule.
C. You are progressing at 76 percent of the rate originally planned.
D. You are progressing at 24 percent of the rate originally planned

Answer C
Explanation
Earned value questions ask for a calculation or an interpretation of the results.
In this case, the project is progressing at 76 percent of the rate planned.
Which of the following represents the estimated value of the work actually accomplished?
A. Earned value (EV)
B. Planned value (PV)
C. Actual cost (AC)
D. Cost variance (CV)

Answer A
Explanation
It can be confusing to differentiate earned value terms from each other.
The estimated value of the work actually completed is the definition of EV, or earned value.
The value of work actually accomplished is also known as
A. Planned Value
B. Earned Value
C. Actual Cost
D. Budgeted Cost for Work Scheduled (BCWS)

Answer:
Justification:

Acronym Term Description Formula

PV Planned Value Physical work to be scheduled, including the estimated
(BCWS) (Budgeted Costs for Work value of the work
Scheduled)
EV Earned Value Physical work actually accomplished, including estimated
(BCWP) (Budgeted Costs for Work value of this work
Performed)
AC Actual Cost Actual cost of the work completed
SV Schedule Variance Negative SV: Behind Schedule EV – PV
Positive SV: Ahead of Schedule
CV Cost Variance Negative CV: Over Budget EV – AC
Positive CV: Under Budget
CPI Cost Performance Index Value got for $1 of Actual Cost EV/AC = BAC/EAC
SPI Schedule Performance Index Progress as a % of Planned Progress EV/PV

Also, please refer to PMBOK® Guide - Fifth Edition, page 218

In your construction project, the CPI is 0.85 and SPI is 1.25. What could be the possible reason?
A. A critical resource went on sick leave for a long period of time, which had not been anticipated earlier.
B. The cost of raw materials required for construction increased by 10%. You had anticipated a cost increase of 12% in your project plans.
C. In anticipation of delays, the project was crashed to decrease the duration.
D. There was four days waiting time in the curing of concrete, and work could not be done during that time.

Answer:
Justification:
Option 3: This is the correct answer, because crashing of a project results in decreased duration and increased costs. This verifies the given data
on CPI and SPI.

Options 1 and 4: They are ruled out, because they do not verify the given data that SPI>1.

Option 2: This is also ruled out, because it does not verify the given data that CPI<1.
Given the following information, determine the EV of your project.
AC = $120,000 PV = $125,000 CV = -$10,000
A. $130,000
B. $110,000
C. $90,000
D. $120,000

Answer:
Justification:
The formula to calculate CV is EV - AC, so when given both CV and AC, you can use this formula as a basis for solving for EV.

CV = EV - AC
EV = CV + AC
EV = -$10,000 + $120,000
EV = $110,000
Please refer to the following diagram:

What is the Earned Value (EV)?

$5,000
$10,000
$11,000
$12,500

Answer:
Justification:
Earned Value (EV)
= The sum of the approved cost estimates for activities completed during a given period
= Estimated cost of work that is completed after day 11
= $5,000 + $5,000 + $5,000 x 0.50 = $12,500 (because Tasks A and B are completed and Task C is 50% complete)
In your project you had planned to have Tasks A, B & C completed already, however tasks A, B, C, and D are 100%, 80%, 0%, and 0% complete
respectively. The value of each day of work is $100. Using the 0-100 Rule and the information given below, calculate the SPI:

Task Duration % Complete

A 3 Days 100%
B 5 Days 80%
C 4 Days 0%
D 3 Days 0%
A. 0.25
B. 1.00
C. 0.50
D. 0.75

Answer: 0.25
Justification:
To calculate SPI, you just use the equation SPI = EV/PV. In this case EV = 3 days.

Since, we are applying the 0-100 rule, we can only say that Task A counts towards earned value (value of work completed). We say that Task A
has 100% of its value of 3 days (or $300), and Task B only counts as 0% (even though it is currently at 80% completion, but, because of the 0-100
rule we assume 0 for EV for this task).

PV would be 12 days (or $1200) because we planned to have Tasks A, B & C done by this point.

Therefore, SPI = 3/12 = 0.25. We are behind schedule.

Note: This logic would also work if $ values are given instead of durations.