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.