During a project progress review, a project manager notes that the project was scheduled to complete $70,000 worth of work by this point but has only completed $50,000 worth of work. The actual costs incurred so far are $60,000. Based on this information, which of the following statements accurately describes the project's status?
The project is ahead of schedule by $10,000 and over budget by $20,000.
The project is ahead of schedule by $20,000 and under budget by $10,000.
The project is behind schedule by $10,000 and under budget by $20,000.
The project is behind schedule by $20,000 and over budget by $10,000.
To determine the project's status, calculate the schedule variance and cost variance. Schedule variance (SV) is calculated as the difference between the value of work completed (earned value) and the planned value of work scheduled to be completed: SV = EV - PV = $50,000 - $70,000 = -$20,000, indicating the project is behind schedule by $20,000. Cost variance (CV) is the difference between the value of work completed and the actual cost: CV = EV - AC = $50,000 - $60,000 = -$10,000, indicating the project is over budget by $10,000. Therefore, the project is behind schedule by $20,000 and over budget by $10,000. The other options are incorrect because they either miscalculate the variances or incorrectly interpret the project's status.
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What are Schedule Variance (SV) and Cost Variance (CV)?
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Predictive, Plan-Based Methodologies
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