# 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.

Term | Acronym | Definition |

AC | Actual Cost | What is the actual cost realized from the work completed. |

BAC | Budget at Completion | How much was budgeted for the total project? |

EAC | Estimate at Completion | What is currently the expected TOTAL cost of the project? |

ETC | Estimate to Complete | From this point on, how much MORE is it expected to cost to finish the project? |

EV | Earned Value | What is the estimated value of the work actually completed? |

PV | Planned Value | What is the estimated value of the work planned to be completed? |

VAC | Variance at Completion | How much over or under budget is the project expected to be at the end? |