About Cost Variance Calculator (Formula)
The Cost Variance Calculator is a financial tool used in project management and cost analysis to measure the variance between the planned or budgeted cost and the actual cost of a project or task. The formula for calculating cost variance is straightforward:
Cost Variance (CV) = Planned Cost (PV) – Actual Cost (AC)
Where:
- Cost Variance (CV) represents the difference between the planned cost and the actual cost, which can be either a surplus (positive CV) or a deficit (negative CV).
- Planned Cost (PV) is the budgeted or estimated cost for a specific project or task.
- Actual Cost (AC) is the actual expense incurred during the execution of the project or task.
A positive cost variance indicates that the project or task was completed under budget, while a negative cost variance suggests that it exceeded the planned budget.
The Cost Variance Calculator is a critical tool for project managers and financial analysts to monitor and control project expenses. It helps in identifying potential cost overruns or savings, allowing for timely adjustments to project budgets and resource allocation to keep projects on track financially.