Cost Variance Calculator
Answers the Question
How much did we over or underspend?
Calculator for Cost Variance
What Is the Cost Variance?
This formula compares the dollars that were expected to be spent for a given bit of a project with what has actually been spent. A variance below 0 will indicate overspending of a project. A variance above 0 will indicate an underspend (savings). A variance equal to 0 will show a project is exactly on target.
Why Is it Important?
- This measure is especially useful when dollars are tight. The formula provides an early warning signal if spending has begun to deviate from expectations.
Formula(s) to Calculate Cost Variance
- COST VARIANCE = EARNED VALUE - ACTUAL COST
- The focus on dollars, rather than percent, may lead to situations in which significant deviations between actual and estimated values appear understated.
- Not rebaselining estimates once large deviations are first noticed.