If earned value is 350, actual cost is 400, and planned value is 325, what is the cost variance?

To determine the cost variance in this scenario, the formula to use is:

Cost Variance (CV) = Earned Value (EV) - Actual Cost (AC).

In this case, the earned value is 350 and the actual cost is 400. Plugging in these values into the formula yields:

CV = 350 - 400 = -50.

A negative cost variance indicates that the project is over budget, and in this instance, it shows that there is a cost overrun of 50 units. This is a crucial metric in project management, as it helps in assessing the financial performance of the project relative to what was planned. The cost variance being negative indicates that actual expenditures are exceeding the budgeted amounts, which requires attention and possible corrective actions. Understanding these financial indicators is essential for effective project management and ensuring that a project remains on track financially.