1. What Is Cost Variance?

Cost Variance (CV) is a key project management metric that measures the difference between the earned value of work performed and the actual costs incurred. It helps determine if a project is under or over budget.

2. How Does The Calculator Work?

The calculator uses the Cost Variance formula:

Where:

• \( CV \) — Cost Variance (USD)
• \( EV \) — Earned Value (USD)
• \( AC \) — Actual Cost (USD)

Explanation: A positive CV indicates the project is under budget, while a negative CV indicates the project is over budget. A CV of zero means the project is exactly on budget.

3. Importance Of Cost Variance Calculation

Details: Cost Variance is crucial for project financial control, budget management, and making informed decisions about resource allocation and project adjustments.

4. Using The Calculator

Tips: Enter Earned Value and Actual Cost in USD. Both values must be valid non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Cost Variance value?
A: A positive CV is generally good as it indicates the project is under budget. The specific target depends on project tolerances and risk appetite.

Q2: How often should Cost Variance be calculated?
A: CV should be calculated regularly throughout the project lifecycle, typically as part of periodic project status reporting.

Q3: What's the difference between Cost Variance and Schedule Variance?
A: Cost Variance measures budget performance, while Schedule Variance measures time performance using the formula SV = EV - PV.

Q4: Can Cost Variance be used for forecasting?
A: Yes, CV trends can help forecast final project costs and identify potential budget overruns early.

Q5: What factors can cause negative Cost Variance?
A: Unexpected expenses, scope changes, inaccurate estimates, resource issues, and external factors can all contribute to negative CV.