What Is Cost Variance (CV) in Earned Value Management?

<div class="ge-article-wrapper"><article class="ge-article-body"><p>Cost Variance (CV) is the difference between the value of work completed and the actual cost of completing it. CV = <a href="/en/earned-value/definitions/earned-value">EV</a> - <a href="/en/earned-value/definitions/actual-cost">AC</a>. Positive means under budget. Negative means over budget. It's the pound value behind the <a href="/en/earned-value/definitions/cost-performance-index">CPI</a> ratio.</p><p>This term is part of the <a href="/en/earned-value/definitions">earned value definitions glossary</a>. For the full formula set, see the <a href="/en/earned-value/formulas">formulas page</a>.</p><h2>The Formula</h2><div class="ge-formula-box ge-anim"><span class="ge-formula-label">Formula</span><code>CV = EV - AC</code></div><p>CV > 0: Under budget (spending less than earning). CV = 0: On budget. CV < 0: Over budget (spending more than earning).</p><h2>CV vs CPI</h2><p>CV gives you the pound value. CPI gives you the ratio. On a £30M project: CV = -£1.5M tells the board "we're £1.5M over." CPI = 0.95 tells them "we're getting 95p of value for every £1 spent." Same information, different framing. Use both.</p><h2>Worked Example</h2><span class="ge-worked-label">Worked Example</span><div class="ge-callout ge-anim"><p><strong>Scenario:</strong> A £24M NEC4 Option C project at month 9.</p><p>EV = £11.4M, AC = £12.1M. CV = £11.4M - £12.1M = <strong>-£700,000</strong>.</p><p>The project has spent £700K more than the value of work completed. On a 50/50 pain share, the contractor is heading for £350K+ of pain at completion if this trend continues.</p></div><h2>Common Mistakes</h2><ol><li><strong>Confusing CV with cash position.</strong> CV measures cost efficiency, not bank balance.</li><li><strong>Not tracking CV trend.</strong> A single CV number is less useful than the monthly trend.</li></ol><div class="ge-product-note ge-anim"><p><strong>How Gather helps.</strong> Gather calculates CV automatically from site diary progress and cost data. <a href="https://gatherinsights.com/contact">Book a demo</a>.</p></div><h2>Frequently Asked Questions</h2><h3>Can CV be positive on a project that's losing money?</h3><p>Yes, if EV is measured against inflated rates. CV measures efficiency against budget, not profitability against tender. A project can have positive CV (efficient against budget) but negative margin (unprofitable against tender).</p></article></div>