Cost Variance (CV)

The term cost variance, also known by the abbreviation of CV, refers specifically to the true measurement of cost performance on a particular project. The cost variance represents the algebraic difference between the earned value of a project (also known by the abbreviation of EV), and the actual cost of the project (also known by the abbreviation AC). The equation to determine the cost variance would be broken down as follows: CV = EV minus AC. If the resulting value for the cost variance is a number greater than zero (or “positive value”), then it is considered to be a favorable cost variance condition. A value that is less than zero, or a resulting “negative” value, represents a cost variance that is considered less than favorable. Because the cost variance is so dependent on the earned value and the actual cost, in order to maintain a favorable cost variance, it is to the project team’s advantage to minimize actual costs to the extent possible.