Cost Variance (CV) Formula & Schedule Variance [2026]
A. Togay Koralturk, Best-Selling PMP Author
Last updated on September 25, 2026
9 min read
A project can spend exactly its budget to date and still be over budget — if the work it bought is worth less than what it paid. Cost variance is the number that exposes that gap, comparing the value earned against the dollars spent to tell you, in plain money, whether the project is ahead or behind on cost. It is one of the simplest earned value figures to calculate and one of the most reliably tested on the PMP. This guide explains cost variance and schedule variance: the formulas, how to read the signs, the percentages, a worked example, and how they are tested on the PMP and CAPM exams.
What is cost variance?
Cost variance (CV) is a measure of a project's budget performance — the difference between the value of the work actually completed and the amount spent to complete it. It comes from earned value management, and it answers a question a plain budget check cannot: not "have we spent what we planned?" but "was the work we did worth what we paid for it?"
The two inputs are earned value (EV), the budgeted value of the work performed, and actual cost (AC), what was spent to perform it. (Note that "cost variance" also has a separate meaning in accounting, where it compares actual to standard costs; this guide is about project cost variance from earned value.)
The cost variance formula and how to read it
The cost variance formula is a simple subtraction, always earned value minus actual cost:
> CV = EV − AC
Read the sign first. Because you subtract what you spent from what the work was worth, a positive result is good and a negative result is bad:
| Cost variance | Meaning |
|---|---|
| CV > 0 (positive) | Under budget — the work is worth more than it cost |
| CV = 0 | On budget — the work is worth exactly what was spent |
| CV < 0 (negative) | Over budget — the work is worth less than what was spent |
So a CV of −$6,000 means the project has spent $6,000 more than the completed work is worth. This is also why the order of the subtraction matters — EV always comes first; reversing it inverts every sign and is one of the most common calculation slips.
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Schedule variance (SV) formula
Schedule variance (SV) is the schedule counterpart to cost variance, built the same way but comparing earned value to planned value instead of actual cost:
> SV = EV − PV
Planned value (PV) is the budgeted cost of the work that should have been done by the status date. So schedule variance measures whether more or less work has been completed than planned: a negative SV means the project has done less than planned — behind schedule — while a positive SV means ahead. The same sign rule holds, negative is bad. The quirk to remember is that schedule variance is expressed in money, not time: an SV of −$10,000 means $10,000 worth of planned work has not been done, which signals a delay but does not directly say how many days.
Cost and schedule variance percentage
A raw variance in dollars tells you the size of the gap but not how serious it is: a −$10,000 variance is trivial on a $10 million project and alarming on a $50,000 one. The percentage variances fix that by expressing the gap as a proportion:
> CV% = CV ÷ EV · SV% = SV ÷ PV
A CV% of −20% means the project is overspending by 20% relative to the value it has earned — a figure you can compare across projects of any size, and one many organizations set thresholds against (for example, flagging any variance beyond ±10%). The percentages turn an absolute number into a severity gauge, which is why they appear on most earned value dashboards alongside the raw variances.
Worked example: calculating cost variance
Take a website redesign with a total budget (BAC) of $80,000. At the status date, the numbers are: earned value EV = $30,000, actual cost AC = $36,000, and planned value PV = $40,000. Running the variances:
| Variance | Calculation | Result | Reading |
|---|---|---|---|
| Cost Variance (CV) | EV − AC = 30,000 − 36,000 | −$6,000 | Over budget |
| Schedule Variance (SV) | EV − PV = 30,000 − 40,000 | −$10,000 | Behind schedule |
| CV% | CV ÷ EV = −6,000 ÷ 30,000 | −20% | 20% over on cost |
| SV% | SV ÷ PV = −10,000 ÷ 40,000 | −25% | 25% behind on work |
Both variances are negative, so the redesign is over budget and behind schedule. The percentages show how serious it is: at −20% cost and −25% schedule, both are well past a typical ±10% threshold, so this project needs attention on both cost and schedule. A plain spend check would have shown $36,000 against a $40,000 plan and looked fine — earned value exposes that the money bought only $30,000 of work.
Variance vs. the performance indexes
Cost variance is often confused with the cost performance index (CPI), because both use the same two numbers. The difference is what they express: a variance is an absolute gap in dollars, while an index is a ratio of efficiency. CV = EV − AC tells you how many dollars off budget you are; CPI = EV ÷ AC tells you how efficiently each dollar is being spent.
The index is a ratio, so it is better for comparing projects of different sizes and for driving the forecasting formulas like estimate at completion. A complete earned value report shows both: the variance gives the size of the gap in dollars, and the index gives the efficiency.
Common causes and what to do
A variance tells you a project is off plan, but not why — and that distinction drives the right response. A negative cost variance can come from underestimated work, scope creep, rework, rising supplier prices, or simple inefficiency, and each calls for a different fix. If you choose a solution before you know the cause, you may correct the wrong thing.
The correct sequence is variance analysis first: investigate what is driving the gap, then choose corrective action — renegotiating a rate, tightening scope control, or re-planning the remaining work. Our PMP Complete Study Guide, the most complete on the market, works through variance analysis with scenarios so the calculation and the judgment come together.
Cost variance on the PMP® and CAPM® Exams
On the PMP exam, cost variance and schedule variance are near-certain to appear as calculation and interpretation questions. You will be given earned value data and asked for CV or SV, or handed a variance and asked what it means — so both formulas, and the "negative is bad" convention, must be automatic. The classic trap is comparing actual cost to planned value; budget performance is always earned value versus actual cost.
The judgment layer is subtler: a variance identifies a problem, not its cause, so the correct next step is usually to analyze the variance before taking corrective action, not to jump straight to cutting scope or adding budget. The CAPM tests the same formulas a little more directly, often a single CV or SV calculation, but still expects you to state what the number means. These questions require both the arithmetic and the rule that you analyze a variance before acting on it.
PMP Practice Question: Cost Variance
A project manager runs a warehouse-automation project with a budget at completion of $240,000. The plan called for 50% of the work to be complete at the status date, but inspection shows 40% complete, with $120,000 spent to date. The PMO requires a formal recovery plan for any variance percentage beyond ±15%, and a team member argues that cost and schedule are "equally off track," since both variances work out to −$24,000.
What should the project manager conclude?
a) The team member is right: CV and SV are both −$24,000, so cost and schedule are equally off track and one combined recovery plan covers both.
b) Cost is the bigger problem: CV% is −25% against an SV% of −20%, so both breach the PMO's threshold, and cost performance is relatively worse.
c) Schedule is the bigger problem: the project is 10 percentage points behind its planned progress, while spending exactly matches the planned value, so cost is under control.
d) Neither variance requires a recovery plan: −$24,000 on a $240,000 budget is a 10% variance, inside the PMO's ±15% limit.
Correct answer: B.
Rationale: Work the numbers from the budget: EV = 40% × $240,000 = $96,000, PV = 50% × $240,000 = $120,000, and AC = $120,000. Both variances are indeed −$24,000 (CV = EV − AC, SV = EV − PV), but equal dollar gaps are not equal severity, because each percentage uses its own base: CV% = −24,000 ÷ 96,000 = −25%, while SV% = −24,000 ÷ 120,000 = −20%. Both breach the ±15% threshold, and cost is relatively worse — exactly what b) states. Choice a) stops at the dollar figures and misses that a variance is judged against its own base. Choice c) reads AC = PV as cost health, the classic planned-value confusion: cost is judged against earned value, which is $24,000 lower than what was spent. Choice d) divides by the total budget, but variance percentages are measured against the work in question (EV or PV), never against BAC. To drill this kind of variance interpretation and judgment, work through our PMP practice exams or, at the entry level, our CAPM practice exams.
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Frequently asked questions
What is cost variance?
Cost variance (CV) is a measure of a project's budget performance, calculated as earned value minus actual cost (CV = EV − AC). It shows whether the work completed is worth more or less than what was spent to complete it. A negative cost variance means the project is over budget; a positive one means under budget.
What is the cost variance formula?
The cost variance formula is CV = EV − AC, where EV is earned value (the budgeted value of the work done) and AC is actual cost (what was spent). For example, an earned value of $30,000 against an actual cost of $36,000 gives a CV of −$6,000, meaning the project is $6,000 over budget.
How do you calculate cost variance?
Determine the earned value (percent complete × total budget) and the actual cost at the status date, then subtract: CV = EV − AC. A positive result is under budget, zero is on budget, and a negative result is over budget. To gauge severity, divide by earned value for the cost variance percentage (CV% = CV ÷ EV).
What is the difference between cost variance and schedule variance?
Cost variance (CV = EV − AC) measures budget performance — whether the work done is worth more or less than what was spent. Schedule variance (SV = EV − PV) measures schedule performance — whether more or less work has been completed than planned. Both are negative when there is a problem, and both are measured in money, even schedule variance.
What does a negative cost variance mean?
A negative cost variance means the project is over budget: the value of the work completed is less than the amount spent to complete it. A CV of −$6,000, for instance, means $6,000 more has been spent than the finished work is worth. The further below zero, the larger the overrun, which the cost variance percentage helps put in proportion.
Is cost variance on the PMP exam?
Yes. Cost variance and schedule variance are among the most reliably tested earned value figures on the PMP exam. You are expected to calculate them from earned value data, apply the "negative is bad" sign convention, and recognize that a variance signals a problem to analyze rather than an instruction to act immediately.
Is cost variance on the CAPM exam?
Yes. The CAPM covers cost and schedule variance, usually a little more directly than the PMP — often a single CV or SV calculation. Because the CAPM is scenario-based, you should be ready not only to compute the value but to state whether it means the project is over or under budget, ahead of or behind schedule.
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