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Chapter 8 of 20

Predictive Cost, Resources, and Schedule Performance (Including Schedule Variance)

Connect time, money, and people by looking at how predictive projects plan resources and measure performance using earned value concepts such as schedule variance. This module turns abstract formulas into intuitive tools you can use on exam day.

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Big Picture: Connecting Time, Money, and People

Where This Fits

You already learned how scope becomes a work breakdown structure and how activities create a schedule. Now we connect that to resources, cost, and performance measurement.

Predictive Life Cycle Context

In a predictive life cycle, scope, time, and cost are determined early. That lets you plan resources and budgets in detail and then measure how the project performs against those plans.

Core Earned Value Terms

Key concepts: Planned Value (PV) = budgeted cost of work scheduled; Earned Value (EV) = budgeted cost of work completed; Actual Cost (AC) = real cost spent.

Schedule Variance Focus

PMI defines schedule variance as: "A measure of schedule performance expressed as the difference between earned value and planned value." The formula is `SV = EV − PV`.

From WBS to Resource Planning and Calendars

From WBS to Activities

You start with the WBS and its work packages. Each work package is broken into scheduled activities. For each activity, you estimate what resources are needed.

Estimating Activity Resources

Estimate types and quantities of resources: people, equipment, materials. Ask: who will do the work, with what tools, and for how long? This is the Estimate Activity Resources process.

Resource Calendars

Resource calendars show when specific people or equipment are available. They reflect vacations, part-time assignments, and limited access to facilities or tools.

Why It Matters

Duration estimates assume certain resources. Change the team size or availability and both duration and cost change. Exam questions often hide this dependency in the scenario text.

Resource Leveling vs. Resource Smoothing

The Overallocation Problem

After assigning people to activities, you may find some are scheduled beyond their capacity. You must adjust the plan to make workloads realistic.

Resource Leveling

Resource leveling delays or rearranges activities based on resource limits. It can change the critical path and may delay the project end date.

Resource Smoothing

Resource smoothing evens out resource use without changing the critical path or project completion date, using only available float on noncritical tasks.

Exam Clues

If finish date cannot move, think smoothing. If date may slip to resolve overallocations, think leveling. Both affect cost and schedule performance.

From Resources to Cost Estimates and the Cost Baseline

Cost Estimating Basics

With resources defined, you estimate costs at the activity or work package level using resource rates, material prices, and estimating techniques like analogous or bottom-up.

Aggregating Costs

You roll up activity costs into work packages, then into higher WBS levels. Summed across the WBS, this forms the project budget structure.

What Is the Cost Baseline?

The cost baseline is the approved, time-phased budget. It shows how much you plan to spend in each period and is used as the reference for earned value analysis.

Why Time-Phased?

Because activities are scheduled in time, their costs fall into specific weeks or months. This timing lets you compare planned vs. actual spending and progress.

Earned Value Management: PV, EV, and AC

What Is EVM?

Earned Value Management integrates scope, schedule, and cost. It compares how much work you planned, how much you actually completed, and how much you spent.

Planned Value (PV)

PV is the budgeted cost of work you planned to complete by a given date. It comes from the time-phased cost baseline and the schedule.

Earned Value (EV)

EV is the budgeted cost of the work actually completed by that date. It uses the original budget for that work, not the actual spending.

Actual Cost (AC)

AC is the real cost incurred for the work performed. Unlike PV or EV, AC reflects invoices, timesheets, and actual spending records.

Schedule Variance: Definition, Formula, and Interpretation

PMI Definition of SV

Schedule variance is: "A measure of schedule performance expressed as the difference between earned value and planned value."

SV Formula

The formula is `SV = EV − PV`. It compares how much value you actually earned to how much value you planned to earn by the status date.

Interpreting SV

SV > 0 means ahead of schedule. SV = 0 means on schedule. SV < 0 means behind schedule. Remember: this is about schedule, even though SV is in money units.

Exam Trap

Spending less than planned (PV vs. AC) is about cost, not schedule. For schedule performance, always look at EV vs. PV.

Worked Example: Calculating SV and Explaining Schedule Performance

Scenario Setup

Budget at completion (BAC) = $100,000. By week 4, you planned to complete 40% of work but actually completed 30%.

Compute PV and EV

PV = 0.40 × $100,000 = $40,000. EV = 0.30 × $100,000 = $30,000. These are both in budgeted cost units.

Compute SV

SV = EV − PV = $30,000 − $40,000 = −$10,000. Negative SV means schedule performance is worse than planned.

Explain the Result

The project is behind schedule by work worth $10,000. On a multiple-choice question, choose the option that says "$10,000 behind schedule," not over/under budget.

Thought Exercise: Linking Resources, Duration, and Cost

Use this scenario to mentally connect resource decisions with duration and cost, then with schedule variance.

Scenario:

  • You manage a small construction project with a BAC of $50,000.
  • Pouring the foundation is a critical activity with a budget of $10,000.
  • Original plan: 5 workers for 4 days, at $500 per worker per day.
  • After planning, you discover that only 3 workers are available during the planned week due to a company-wide training.

Reflect on these questions (pause and answer before reading the hints):

  1. How will the reduced resource availability likely affect the activity duration?
  2. How might this change affect the overall project schedule and cost baseline?
  3. Weeks later, when you calculate SV, how could this early resource problem show up in your EV and PV values?

Hints to check your thinking:

  • With only 3 workers instead of 5, the activity will likely take longer unless you change the method or work overtime.
  • If the activity is on the critical path, extending its duration can delay the project finish date, forcing a revision of the schedule and possibly the cost baseline (more overhead, supervision, etc.).
  • At the original planned finish date for the foundation, your PV assumes the foundation is fully complete (100% of $10,000). But if the activity is only, say, 60% done due to fewer workers, your EV will be 60% × $10,000 = $6,000.
  • That gives `SV = EV − PV = $6,000 − $10,000 = −$4,000`, indicating you are behind schedule on that status date.

Key takeaway: Resource constraints at planning time ripple through duration, cost, and later EVM metrics. When you see SV questions, remember the root causes often lie in early resource and schedule decisions.

Quiz 1: Core EVM and Schedule Variance Concepts

Test your understanding of PV, EV, AC, and SV.

A project has a budget at completion (BAC) of $200,000. At the end of month 3, the project manager reports: PV = $60,000, EV = $50,000, AC = $55,000. Which statement best describes the project's schedule performance at the end of month 3?

  1. The project is $10,000 behind schedule.
  2. The project is $10,000 ahead of schedule.
  3. The project is $5,000 under budget.
  4. The project is $5,000 over budget.
Show Answer

Answer: A) The project is $10,000 behind schedule.

Schedule variance is defined as "A measure of schedule performance expressed as the difference between earned value and planned value." The formula is SV = EV − PV. Here, SV = $50,000 − $60,000 = −$10,000. A negative SV means the project is behind schedule by work worth $10,000. Options about under/over budget relate to cost variance (which would compare EV and AC), not schedule performance.

Quiz 2: Resource Planning and Leveling vs. Smoothing

Check your understanding of resource techniques and their impact on schedule and cost.

A project manager discovers that a key engineer is scheduled to work on three critical activities at the same time, resulting in overallocation. The sponsor insists that the project completion date must not change. What is the MOST appropriate technique for the project manager to use?

  1. Resource leveling, even if it delays the project finish date
  2. Crashing the project by adding more resources regardless of cost
  3. Resource smoothing using available float on noncritical activities
  4. Fast tracking by performing more work in parallel
Show Answer

Answer: C) Resource smoothing using available float on noncritical activities

When the project completion date must not change, the appropriate technique is **resource smoothing**, which adjusts activities within their float without changing the critical path or end date. Resource leveling can delay the project finish date. Crashing and fast tracking are schedule compression techniques that affect cost and risk, not specifically designed to resolve overallocations while holding the end date fixed.

Key Term Flashcards: Cost, Resources, and Schedule Performance

Use these flashcards to solidify key definitions for the CAPM exam.

project
A temporary endeavor undertaken to create a unique product, service, or result.
stakeholder
An individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project, program, or portfolio.
predictive life cycle
A development life cycle in which the project scope, time, and cost are determined in the early phases of the life cycle.
work breakdown structure (WBS)
A hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables.
work package
The work defined at the lowest level of the work breakdown structure for which cost and duration are estimated and managed.
Planned Value (PV)
The authorized, budgeted cost of work scheduled to be completed by a given date (a component of the cost baseline).
Earned Value (EV)
The budgeted cost of work actually completed by a given date, expressed in terms of the approved budget.
Actual Cost (AC)
The realized cost incurred for the work performed on an activity during a specific time period.
schedule variance (SV)
A measure of schedule performance expressed as the difference between earned value and planned value.
Resource calendar
A calendar that identifies the working days and shifts on which each specific resource is available and any planned time off or constraints.
Cost baseline
The approved, time-phased budget used as a basis for measuring and monitoring cost performance.

Using Performance Information for Decisions and Stakeholder Communication

Why Measure Performance?

Numbers like PV, EV, AC, and SV help you see schedule and cost issues early so you can act before they become crises.

Decision Support

Negative SV may lead you to re-sequence work, adjust resources, or consider schedule compression. You always look for root causes, not just the symptom.

Stakeholder Communication

Translate metrics into plain language: how far ahead or behind you are, why, and what you propose to do about it.

Exam Perspective

When a question shows EVM data, expect to compute SV and then pick the option that reflects analysis, appropriate corrective action, and clear communication.

Key Terms

project
A temporary endeavor undertaken to create a unique product, service, or result.
stakeholder
An individual, group, or organization who may affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project, program, or portfolio.
work package
The work defined at the lowest level of the work breakdown structure for which cost and duration are estimated and managed.
cost baseline
The approved, time-phased budget used as a basis for measuring and monitoring cost performance.
Actual Cost (AC)
The realized cost incurred for the work performed on an activity during a specific time period.
Earned Value (EV)
The budgeted cost of work actually completed by a given date, expressed in terms of the approved budget.
resource calendar
A calendar that identifies the working days and shifts on which each specific resource is available and any planned time off or constraints.
resource leveling
A resource optimization technique that adjusts the start and finish dates of activities based on resource constraints, which may change the critical path and project completion date.
schedule variance
A measure of schedule performance expressed as the difference between earned value and planned value.
Planned Value (PV)
The authorized, budgeted cost of work scheduled to be completed by a given date (a component of the cost baseline).
resource smoothing
A resource optimization technique that adjusts activities within their float so that resource requirements do not exceed predefined limits, without changing the critical path or project completion date.
predictive life cycle
A development life cycle in which the project scope, time, and cost are determined in the early phases of the life cycle.
work breakdown structure
A hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish the project objectives and create the required deliverables.

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