Conference

In: Business and Management

Submitted By siree123
Words 314
Pages 2
The Cost Variance tells us that how much we are over or under budget. The Cost Variance (CV) is a measure of the cost performance of the project.

 If the Cost Variance (CV) is positive, this means we are under budget.
 If the Cost Variance (CV) is negative, this means we over budget.

In the earned value reporting system for projects, we are concerned with knowing how our project is doing with respect to the amount of money being spent and the accomplishments being achieved. The measure for this comparison is the cost variance.
To compute the cost variance, we compare the work that was actually completed to the actual amount spent to accomplish it. This means that we will be comparing the budgeted cost of work performed, the BCWP, with the actual cost of work performed
People always have trouble remembering these things. They get them mixed up and end up having a positive variance when they are really having a negative variance. It is good to remember that bad variances are always negative and good variances are always positive. If we consider that completed project tasks have an actual cost that is less than what was planned for, we could say that this is a good variance and it should have a positive value. If, on the other hand, we have spent more to accomplish our tasks than the plan allowed for, we could say that this is a bad condition and our variance will be a negative number. Of course "good" and "bad" must be qualified. Just because we have a positive cost variance does not always mean something good. If our cost variance is positive and we have left out some of the required work it would not be such a good thing. A good rule of thumb is that any variances, whether positive or negative, should be…...

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