What is the formula for Cost Variance (CV) and what does a negative CV indicate?

• A. CV = EV − PV; negative CV indicates cost overrun
• B. CV = EV − AC; negative CV indicates budget surplus
• C. CV = EV − AC; negative CV indicates cost overrun
• D. CV = AC − EV; negative CV indicates under budget

Answer: (C)

In earned value management, Cost Variance shows how cost performance compares to the work that’s actually been completed. The correct formula is CV = EV − AC. If the result is negative, it means actual costs exceed the value of the work performed, signaling a cost overrun (you’re over budget). Using PV in this calculation would mix planned value with performance, and reversing the order (AC − EV) would invert the meaning. So CV = EV minus AC, with a negative value indicating a cost overrun.