DAVION

SYSTEMS

Cost Variance

 

Cost variance (CV), in the context of cost performance calculations, is a measure of how well you are doing relative to the project plan with respect to cost. It is defined by:

 

          CV = EV – AC

 

where EV is earned value and AC is actual cost. A negative cost variance indicates overspend. A positive cost variance indicates underspend.

 

Example

          Budget at completion (BAC)          =  $1000

          % of work completed                    =  60%

          Earned value (EV)                        =  $1000 x 60%  =  $600

          Actual cost (AC)                          =  $750

          Cost variance (CV)                     = $600 - $750  =  -$150

 

i.e. you have spent $150 more to achieve the amount of work completed than was originally planned.