Cost Variance and Project Management Terms

Cost Variance and Project Management Terms

If you’re looking to take the PMP exam, there are several definitions you need to know.  You MUST know and understand the definitions listed in the table below.

The exam won’t come right out and ask you “What does Actual Cost mean?”  The questions are more like:  “What kind of Variance do you have on a deliverable if the Earned Value is $75,000 and the Actual Cost is $77,000?�
I won’t tell you the answer. I will, however, tell you how to figure it out.
Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC).
A negative cost variance means you are over budget.
A positive cost variance means you are under budget.

TermAcronymDefinition
ACActual CostWhat is the actual cost realized from the work completed.
BACBudget at CompletionHow much was budgeted for the total project?
EACEstimate at CompletionWhat is currently the expected TOTAL cost of the project?
ETCEstimate to CompleteFrom this point on, how much MORE is it expected to cost to finish the project?
EVEarned ValueWhat is the estimated value of the work actually completed?
PVPlanned ValueWhat is the estimated value of the work planned to be completed?
VACVariance at CompletionHow much over or under budget is the project expected to be at the end?

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