CAM Variance Analysis & Corrective Actions 1 — Questions and Answers
Question 1: What does a negative Schedule Variance (SV) indicate in earned value management?
- Work is ahead of schedule
- Work is behind schedule (Correct answer)
- Work is on schedule
- Cost is over budget
Correct answer: Work is behind schedule
A negative SV (EV - PV < 0) means less work was accomplished than planned, indicating the project is behind schedule.
Question 2: What is the correct formula for Cost Variance (CV) in earned value management?
- CV = BAC - EAC
- CV = PV - AC
- CV = EV - AC (Correct answer)
- CV = AC - EV
Correct answer: CV = EV - AC
Cost Variance equals Earned Value minus Actual Cost; a positive CV means you spent less than budgeted for work actually performed.
Question 3: A Control Account Manager identifies a Cost Performance Index (CPI) of 0.85. What does this indicate?
- The project is 85% complete
- For every dollar spent, only $0.85 of planned work is being accomplished (Correct answer)
- The project will cost 85% of the original budget
- The schedule is 15% behind plan
Correct answer: For every dollar spent, only $0.85 of planned work is being accomplished
A CPI of 0.85 means the project is getting only $0.85 worth of work for every $1.00 spent, indicating a cost overrun situation.
Question 4: Which type of variance metric is most reliable when performing root cause analysis on a control account's overall cost health?
- Period-to-date Cost Variance
- Schedule Variance for the current period
- Cumulative Cost Variance (Correct answer)
- Variance at Completion estimate
Correct answer: Cumulative Cost Variance
Cumulative CV smooths out period-to-period fluctuations and reflects the true overall cost health of the control account, making it the most reliable root cause signal.
Question 5: Variance Analysis Report (VAR) thresholds that trigger a written explanation are typically defined by which source?
- DoD standard 5000.02
- The project contract or program management plan (Correct answer)
- GAO cost estimating guidelines
- ANSI/EIA-748 standard minimums
Correct answer: The project contract or program management plan
Variance thresholds for VAR reporting are contractually or procedurally defined and vary by project; there is no universal fixed percentage mandated across all programs.
Question 6: When a CAM prepares a variance analysis narrative, which element should be addressed first?
- Corrective action plan
- Root cause identification (Correct answer)
- Cost impact on the estimate at completion
- Schedule recovery milestones
Correct answer: Root cause identification
Root cause analysis must precede corrective action because understanding why the variance occurred is the foundation for selecting the appropriate response.
Question 7: In earned value management, 'Undistributed Budget' (UB) is best described as budget that:
- Has been distributed to specific work packages
- Is held in management reserves outside the PMB
- Is part of the PMB but not yet allocated to specific control accounts (Correct answer)
- Has been spent without formal authorization
Correct answer: Is part of the PMB but not yet allocated to specific control accounts
Undistributed Budget is within the Performance Measurement Baseline but has not yet been assigned to specific control accounts or work packages pending further planning.
CAM Variance Analysis & Corrective Actions 1
What does a negative Schedule Variance (SV) indicate in earned value management?