PMI Risk Management Professional Practice Exam

If a project has a negative cost variance and an SPI less than 1.0, what does this typically indicate?

1. The project is on track and within budget

2. The project is over-budget and behind schedule

3. The project is under-budget and ahead of schedule

4. The project has a positive net gain

The correct answer is: The project is over-budget and behind schedule

A negative cost variance indicates that the project has spent more money than planned at a particular point in time. This situation suggests that costs are exceeding the budgeted amounts. When combined with a schedule performance index (SPI) of less than 1.0, it signals that the project is also behind schedule. The SPI is a measure of the efficiency of time used on a project; a value below 1.0 indicates that the project is not progressing as planned in terms of scheduled work. Thus, having both a negative cost variance and an SPI lower than 1.0 typically means that the project is experiencing both monetary and temporal deficiencies. This combination leads to the conclusion that the project is over-budget and behind schedule, making the chosen answer the most accurate reflection of the project's status.