# 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

## Common Mistakes

- 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.