To determine cost variance compare the BCWP to __ Cost of work performed.

To determine cost variance compare the BCWP to __ Cost of work performed.

• A. actual
• B. budgeted
• C. planned
• D. forecasted

Answer: (A)

Cost variance measures whether the cost of work performed matches what was planned. In Earned Value Management, you compare the earned value, BCWP, with the actual cost of the work performed. The actual cost of the work performed is the money actually spent to complete the work. The relationship is CV = BCWP − ACWP. A positive variance means costs came in under budget for the completed work, while a negative variance means overspending. Therefore, when asked which value to compare BCWP to in order to determine cost variance, the correct term is the actual cost of work performed. For example, if BCWP is 100,000 and actual cost is 90,000, CV is 10,000 (favorable). If actual cost is 110,000, CV is −10,000 (unfavorable).

Cost variance measures whether the cost of work performed matches what was planned. In Earned Value Management, you compare the earned value, BCWP, with the actual cost of the work performed. The actual cost of the work performed is the money actually spent to complete the work. The relationship is CV = BCWP − ACWP. A positive variance means costs came in under budget for the completed work, while a negative variance means overspending. Therefore, when asked which value to compare BCWP to in order to determine cost variance, the correct term is the actual cost of work performed. For example, if BCWP is 100,000 and actual cost is 90,000, CV is 10,000 (favorable). If actual cost is 110,000, CV is −10,000 (unfavorable).