What Is Cost Variance Percentage (CV%) in EVM?

<div class="ge-article-wrapper"><nav class="ge-toc" aria-label="Table of contents"><p class="ge-toc-label">In this article</p><ul class="ge-toc-list"><li><a href="#why-cv-exists">Why CV% Exists</a></li><li><a href="#the-relationship-between-cv-cpi-and-cv">The Relationship Between CV%, CPI, and CV</a></li><li><a href="#worked-example-portfolio-dashboard-with-cv">Worked Example: Portfolio Dashboard With CV%</a></li><li><a href="#threshold-table">Threshold Table</a></li><li><a href="#common-mistakes">Common Mistakes</a></li><li><a href="#frequently-asked-questions">Frequently Asked Questions</a></li></ul></nav><article class="ge-article-body"><p>Cost Variance Percentage (CV%) normalises <a href="/en/earned-value/definitions/cost-variance">cost variance</a> so you can compare projects of wildly different sizes. A CV of -£200,000 means something entirely different on a £5M package than on a £50M programme. CV% strips out the scale and gives you a rate. It's the metric that lets a commercial director scan ten projects in a dashboard and instantly spot which ones are bleeding.</p><p><strong>CV% = (CV / EV) x 100</strong></p><p>Or equivalently:</p><p><strong>CV% = ((EV - AC) / EV) x 100</strong></p><p>Where:</p><ul><li><strong><a href="/en/earned-value/definitions/cost-variance">CV</a></strong> = Cost Variance (EV - AC)</li><li><strong><a href="/en/earned-value/definitions/earned-value">EV</a></strong> = Earned Value (budgeted cost of work completed)</li><li><strong><a href="/en/earned-value/definitions/actual-cost">AC</a></strong> = Actual Cost (what you've actually spent)</li></ul><p>CV% is part of the <a href="/en/earned-value/definitions">earned value definitions glossary</a>. For the full variance reference, see the <a href="/en/earned-value/cost-schedule-variance">cost and schedule variance page</a>.</p><h2 id="why-cv-exists">Why CV% Exists</h2><p>Raw CV is great for one project. It tells you the pound figure. But the moment you need to compare across projects, it falls apart.</p><pre class="ge-ascii-diagram ge-anim"> PROJECT COMPARISON – Same CV, Very Different Stories Project A: £5M fit-out Project B: £50M highway ───────────────────────── ───────────────────────── EV = £4,800,000 EV = £28,000,000 AC = £5,000,000 AC = £28,200,000 CV = -£200,000 CV = -£200,000 CV% = -£200K / £4.8M CV% = -£200K / £28M = -4.2% = -0.7% ┌──────────────────┐ ┌──────────────────┐ │ █████████████░░ │ -4.2% │ ██████████████▒ │ -0.7% └──────────────────┘ └──────────────────┘ Significant problem Rounding error Same £200K. Completely different severity. </pre><p>Project A is haemorrhaging. For every £100 of value delivered, it's spending £104.20. That compounds across the remaining works and could wipe out the margin entirely. Project B has a minor blip, £200K on a £50M scheme is within normal variance. Without CV%, the dashboard shows two red flags. With CV%, it shows one red flag and one green tick.</p><h2 id="the-relationship-between-cv-cpi-and-cv">The Relationship Between CV%, CPI, and CV</h2><p>These three metrics are mathematically linked. If you know any two, you can derive the third.</p><div class="ge-table-wrap ge-anim"><table class="ge-table"><thead><tr><th>Metric</th><th>Formula</th><th>Output</th><th>Use Case</th></tr></thead><tbody><tr><td><strong>CV</strong></td><td>EV - AC</td><td>Pounds (£)</td><td>Absolute overrun for board reporting</td></tr><tr><td><strong>CV%</strong></td><td>CV / EV x 100</td><td>Percentage</td><td>Cross-project comparison, thresholds</td></tr><tr><td><strong><a href="/en/earned-value/definitions/cost-performance-index">CPI</a></strong></td><td>EV / AC</td><td>Ratio</td><td>Forecasting <a href="/en/earned-value/definitions/estimate-at-completion">EAC</a>, <a href="/en/earned-value/definitions/trend-analysis">trend analysis</a></td></tr></tbody></table></div><p>The mathematical link: <strong>CV% = (1 - 1/CPI) x 100</strong></p><p>So a CPI of 0.91 gives CV% = (1 - 1/0.91) x 100 = -9.9%. They're telling you the same thing in different formats. CPI speaks to commercial managers who use it for forecasting. CV% speaks to directors who want a quick health check across the portfolio.</p><h2 id="worked-example-portfolio-dashboard-with-cv">Worked Example: Portfolio Dashboard With CV%</h2><span class="ge-worked-label">Worked Example</span><div class="ge-callout ge-anim"><p><strong>Scenario:</strong> A Tier 1 contractor runs five NEC4 packages simultaneously. The commercial director reviews the monthly portfolio dashboard (December 2025).</p><div class="ge-table-wrap ge-anim"><table class="ge-table"><thead><tr><th>Project</th><th>Contract</th><th>EV</th><th>AC</th><th>CV</th><th>CV%</th><th>CPI</th><th>Status</th></tr></thead><tbody><tr><td>M6 Junction Improvement</td><td>£52M Option C</td><td>£28.4M</td><td>£28.6M</td><td>-£200K</td><td>-0.7%</td><td>0.993</td><td>Green</td></tr><tr><td>A14 Bridge Replacement</td><td>£18M Option A</td><td>£9.7M</td><td>£10.8M</td><td>-£1.1M</td><td>-11.3%</td><td>0.898</td><td>Red</td></tr><tr><td>Rail Electrification Phase 2</td><td>£35M Option C</td><td>£19.2M</td><td>£18.4M</td><td>+£800K</td><td>+4.2%</td><td>1.043</td><td>Green</td></tr><tr><td>Water Treatment Upgrade</td><td>£8M Option C</td><td>£4.8M</td><td>£5.0M</td><td>-£200K</td><td>-4.2%</td><td>0.960</td><td>Amber</td></tr><tr><td>Depot Refurbishment</td><td>£5M Option A</td><td>£3.1M</td><td>£2.9M</td><td>+£200K</td><td>+6.5%</td><td>1.069</td><td>Green</td></tr></tbody></table></div><p><strong>Reading the dashboard:</strong></p><p>Without CV%, the M6 and Water Treatment projects both show -£200K cost variance. Identical headline number. But CV% reveals the truth: the M6 is barely off budget (-0.7%) while the Water Treatment project is losing 4.2% on every pound of work. That's the difference between "no action needed" and "schedule a commercial review this week."</p><p>The A14 at -11.3% is the real emergency. That CPI of 0.898 means for every £1 spent, the team delivers 90p of value. On the remaining £8.3M of work, if efficiency doesn't improve, the <a href="/en/earned-value/definitions/estimate-at-completion">EAC</a> is £18M / 0.898 = £20.04M, a £2.04M overrun on an £18M fixed-price contract. On Option A, where you can't adjust the target, that overrun comes straight off the margin.</p><p><strong>The action:</strong> The commercial director calls a recovery meeting for A14, requests a root cause analysis, and asks whether any of the cost overrun qualifies for compensation events. Meanwhile, the M6 and Depot projects carry on with normal monthly monitoring.</p></div><h2 id="threshold-table">Threshold Table</h2><p>I've seen various threshold schemes across different clients and frameworks. This is the one I use for UK construction projects:</p><div class="ge-table-wrap ge-anim"><table class="ge-table"><thead><tr><th>CV% Range</th><th>RAG Status</th><th>Interpretation</th><th>Action Required</th></tr></thead><tbody><tr><td><strong>> +5%</strong></td><td>Blue</td><td>Significantly under budget</td><td>Check EV measurement, are you overclaiming progress?</td></tr><tr><td><strong>+1% to +5%</strong></td><td>Green</td><td>Under budget</td><td>Healthy. Monitor for sustainability.</td></tr><tr><td><strong>0% to -3%</strong></td><td>Green</td><td>Minor variance</td><td>Normal range. Investigate if trending downward.</td></tr><tr><td><strong>-3% to -7%</strong></td><td>Amber</td><td>Moderate overrun</td><td>Root cause analysis. Review at monthly commercial meeting.</td></tr><tr><td><strong>-7% to -12%</strong></td><td>Red</td><td>Significant overrun</td><td>Recovery plan required. Escalate to project director.</td></tr><tr><td><strong>< -12%</strong></td><td>Red (critical)</td><td>Severe overrun</td><td>Immediate intervention. Probably too late for recovery without contract relief.</td></tr></tbody></table></div><p>These thresholds aren't gospel. A -5% CV% on a £100M programme is £5M. That demands a different response than -5% on a £2M package. Use CV% for screening, then switch to raw CV and CPI for the detailed analysis.</p><h2 id="common-mistakes">Common Mistakes</h2><ol><li><strong>Dividing by AC instead of EV.</strong> I've seen this more times than I'd like to admit. CV% = CV / EV, not CV / AC. The denominator is Earned Value because you're expressing the variance as a percentage of what the work is worth, not what you spent. Using AC as the denominator gives you a different ratio that isn't CV% and doesn't compare cleanly across projects.</li><li><strong>Using CV% when EV is very small.</strong> Early in a project, EV might be £200K. A CV of -£50K gives a CV% of -25%, which looks catastrophic. It's not. It's one material delivery or one subcontractor invoice. CV% is meaningless until you've got enough EV for the ratio to stabilise. I don't trust CV% until a project is at least 15-20% complete.</li><li><strong>Setting the same thresholds regardless of contract type.</strong> On NEC4 Option A (fixed price), a -5% CV% eats directly into your margin. On Option C (<a href="/en/earned-value/definitions/target-cost">target cost</a>), the same -5% is shared between Contractor and Client through the pain/gain mechanism. Your threshold table should reflect the contract risk profile. I use tighter thresholds for Option A and looser ones for Option C.</li><li><strong>Ignoring the trend.</strong> A CV% of -3% is amber. But a CV% that's gone from -1% to -2% to -3% over three months is a trend heading towards red. Plot CV% over time, not just the current period snapshot. The direction matters more than the number.</li></ol><div class="ge-product-note ge-anim"><p><strong>How Gather helps.</strong> Gather's AI reads your site diaries daily and maps progress against your cost-loaded programme, giving you accurate earned value data without manual spreadsheet updates. <a href="https://gatherinsights.com/contact">Book a demo</a> to see it working on a live NEC4 project.</p></div><h2 id="frequently-asked-questions">Frequently Asked Questions</h2><h3>What is the formula for cost variance percentage?</h3><p>CV% = (CV / EV) x 100, where CV is <a href="/en/earned-value/definitions/cost-variance">Cost Variance</a> (EV minus AC) and <a href="/en/earned-value/definitions/earned-value">EV</a> is Earned Value. A positive CV% means you're under budget; negative means over budget. For example, if EV = £10M and AC = £10.8M, then CV = -£800K and CV% = (-£800K / £10M) x 100 = -8.0%.</p><h3>What is a good cost variance percentage?</h3><p>On well-managed UK construction projects, CV% typically falls between -5% and +5%. Anything above 0% is favourable (under budget). Between 0% and -5% is normal variance. Below -5% usually requires investigation and a recovery plan. Below -10% is a serious problem. But context matters, these thresholds should be tighter on fixed-price contracts (NEC4 Option A) where overruns hit your margin directly, and can be looser on target cost contracts (Option C) where the risk is shared.</p><h3>What's the difference between CV% and CPI?</h3><p>They measure the same thing differently. CV% expresses cost performance as a percentage deviation from plan. <a href="/en/earned-value/definitions/cost-performance-index">CPI</a> expresses it as a ratio of value delivered per pound spent. They're mathematically linked: CV% = (1 - 1/CPI) x 100. A CPI of 0.90 equals a CV% of -11.1%. Use CV% for portfolio-level screening and threshold alerts. Use CPI for <a href="/en/earned-value/definitions/estimate-at-completion">EAC</a> forecasting and trend analysis.</p></article></div>