Cost Variance

Cost Variance

Cost Variance Jonathan Poland

Cost variance (CV) is a project management metric that measures the difference between the budgeted cost of a project and the actual cost. It is calculated by subtracting the budgeted cost from the actual cost, and is expressed as a percentage of the budgeted cost.

For example, if the budgeted cost of a project is $100,000 and the actual cost is $110,000, the cost variance would be calculated as follows:

CV = Actual Cost – Budgeted Cost = $110,000 – $100,000 = $10,000

CV = $10,000 / $100,000 = 10%

A positive cost variance indicates that the project is over budget, while a negative cost variance indicates that the project is under budget.

Cost variance is an important metric for project managers and stakeholders to track, as it provides insight into the efficiency of project cost management and the likelihood of the project being completed within budget. By monitoring cost variance, project managers can identify and address any cost overruns or inefficiencies early in the project, which can help to minimize the impact of these issues and improve the chances of project success.

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