Cost variance (CV), also known as budget variance, is the difference between the actual cost and the budgeted cost, or what you expected to spend versus what you actually spent. This formula helps project managers figure out if they are over or under budget. A positive CV shows that the project is under budget, and a negative CV shows that the project is over budget. If the calculated cost variance is zero (or very close to zero), you are on budget. In earned value management, value always comes down to money, whether the commodity is time or actual dollars spent. Earned value management (EVM) is a project management technique that combines scope, time, and costs to forecast in a project.
Cost Variance = Earned Value – Actual Cost
If both variances are positive, this means that your project is progressing well. However, something is wrong if either variance is negative and you have to take corrective action to bring the project back on track.