Cost variance (CV) is a project management number that measures how much a project actually cost compared to how much it was supposed to cost. It helps figure out if a job is under or over price. The method for figuring out the cost difference is:
CV = Earned Value (EV) – Actual Cost (AC)
where EV is the expected value of the work done up to a certain point in time and AC is the real cost of the work done up to the same point in time. If the CV is positive, the project is under budget. If the CV is negative, the project is over budget.
For example, if the expected cost of a project is $100,000 and the real cost of the work done is $90,000, but the gained value up to that point is $95,000, then the cost difference would be:
CV = $95,000 – $90,000 = $5,000 (positive)
This would mean that the project is $5,000 over budget at the moment.
Usage
It is used in project schedule and cost management
