A Negative Result From a Cost Variance (CV) Calculation Means?
A negative result from a Cost Variance (CV) calculation means which of the following:
A. AC is higher than EV.
B. PV = 1.
C. EV is higher than AC.
D. EV is higher than PV.
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The correct answer is:
A. AC is higher than EV.
In project management, Cost Variance (CV) is a metric used to determine whether a project's costs are over or under budget at a specific point in time. It's calculated by subtracting the actual cost (AC) of the work performed from the earned value (EV) of the work that was expected to be completed by that point.
If the result of the Cost Variance (CV) calculation is negative, it means that the actual cost (AC) of the work performed is higher than the earned value (EV) of the work that was supposed to be completed according to the project plan. In other words, more money has been spent than what was originally anticipated based on the progress made.
Hence, option A, "AC is higher than EV," correct.
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