Cost Variance (CV) is a measure of the difference between the actual cost of a project and its budgeted cost. It is used to track the performance of a project in terms of cost management. A positive CV indicates that the project is under budget, while a negative CV indicates that the project is over budget.
Cost Variance can be calculated by subtracting the actual cost from the budgeted cost. The formula for calculating CV is: CV = Budgeted Cost - Actual Cost. If the result is positive, then the project is under budget; if it’s negative, then the project is over budget.
Cost Variance is an important tool for tracking and managing costs on projects. It helps project managers identify areas where costs are exceeding expectations and take corrective action to bring them back in line with the budget. By monitoring CV, project managers can ensure that their projects stay within their budgets and meet their goals.