Question

You are three months into a 6-month, $195,000 project. Invoices paid to date are $37,500 and the planned costs at three months were $75,000. What is the schedule variance?

1) $97,500
2) $22,500
3) $37,500
4) $25,000

Answer 1

The schedule variance is calculated as the difference between Earned Value and Planned Value. The Earned Value is $37,500 (invoices paid to date) and the Planned Value is $75,000, resulting in a schedule variance of -$37,500, indicating the project is behind schedule.

Step-by-step explanation:

The student is asking to calculate the schedule variance for a project at the 3-month mark. The schedule variance (SV) is a measure of project performance and indicates whether a project is ahead or behind the planned schedule. It is calculated by the formula: SV = Earned Value (EV) - Planned Value (PV).

In this case, the Earned Value (EV) is the amount of work that has been completed, which can be approximated by the invoices paid to date. Hence, EV = $37,500. The Planned Value (PV) is the budgeted cost of the work that was scheduled to be completed by the three-month mark, which is, PV = $75,000.

By substituting the given values into the SV formula, we get: SV = $37,500 - $75,000, which results in a schedule variance of $37,500 negative, indicating that the project is behind schedule.