1. What Is The Cost Variance Formula?

The Cost Variance (CV) formula is a key project management metric that measures the difference between the earned value (EV) and actual cost (AC) of a project. It helps determine whether 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 it's 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 management as it provides early warning signs of budget issues, helps in making informed decisions about resource allocation, and enables proactive budget control measures.

4. Using The Calculator

Tips: Enter both EV and AC values in USD. Ensure values are non-negative numbers representing the earned value and actual costs of your project.

5. Frequently Asked Questions (FAQ)

Q1: What does a positive Cost Variance mean?
A: A positive CV indicates that the project is under budget - the earned value exceeds the actual costs.

Q2: What does a negative Cost Variance indicate?
A: A negative CV means the project is over budget - the actual costs have exceeded the earned value.

Q3: How often should Cost Variance be calculated?
A: CV should be calculated regularly throughout the project lifecycle, typically during periodic project reviews or at major milestones.

Q4: What's the difference between Cost Variance and Schedule Variance?
A: Cost Variance (CV) measures budget performance (EV - AC), while Schedule Variance (SV) measures schedule performance (EV - PV).

Q5: Can Cost Variance be used alone for project assessment?
A: While CV is important, it should be used alongside other metrics like Schedule Variance and Cost Performance Index for comprehensive project performance analysis.