# 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.