How is Cost Variance (CV) calculated?

Cost Variance (CV) is a crucial metric in project management that indicates how much under or over budget a project is at a given point in time. It helps assess the financial performance of the project and is calculated using the formula:

CV = BCWP - ACWP

Where:

• BCWP (Budgeted Cost of Work Performed) represents the value of work actually completed up to a certain point in time, based on the budget.

• ACWP (Actual Cost of Work Performed) is the actual cost incurred for the work that has been completed up to that same point.

By subtracting the Actual Cost from the Budgeted Cost of what has been performed, you can determine if there is a variance that indicates the project is under budget (positive CV) or over budget (negative CV). This calculation is vital for project managers to track financial health throughout the project lifecycle.