Your project has a budget of $75,000 and is 60 percent complete though are supposed to be 75 percent done at this time. You have spent $50,000 to reach this point of the project. If management wanted to know your cost variance for this project what formula would you want Microsoft Project to calculate for you?
A.
Earned value – actual cost
B.
Earned value/actual cost
C.
Earned value – planned value
D.
Earned value – budget at completion
Explanation:
You would want Microsoft Project through, Project Center, to calculate and show the results of your earned value minus the actual costs. In this instance, your earned value is $45,000 and your actual cost is $50,000. Therefore, cost variance will be -$5,000. Answer option C is incorrect. Earned value – planned value is the formula for finding the schedule variance using earned value management.
Answer option B is incorrect. Earned value/actual cost is the formula for finding the cost performance index.
Answer option D is incorrect. Earned value – budget at completion is the formula for finding the project variance at the end of the project.
What is CV?
Cost variance (CV) is a measure of cost performance on a project. The variance notifies if costs are higher than budgeted or lower than budgeted. The cost variance is calculated based on the following formula:
CV = Earned Value (EV) – Actual Cost (AC)
A positive value means that spending is less than budgeted, whereas a negative value indicates that costs are higher than originally planned for the project.