What does the Cost Variance (CV) measure in project performance?

• A. The difference between actual and budgeted costs for work performed
• B. The total cost of all project tasks and resources
• C. The projected cost at project completion
• D. The estimated cost of future project tasks

Answer: (A)

Cost Variance (CV) is a critical measure in project performance that quantifies the difference between the actual costs incurred for work performed and the budgeted costs allocated for that work. This metric is essential for assessing how well a project is adhering to its financial plan and identifying any discrepancies early in the project lifecycle.

When the actual costs are lower than the budgeted costs, the CV is positive, indicating that the project is under budget. Conversely, a negative CV suggests that the project is over budget, which may require corrective actions to realign the project back on track financially. Understanding CV helps project managers make informed decisions about resource allocation, cost management, and overall project strategy to ensure that financial targets are met.

The other options do not accurately describe what Cost Variance measures. The total cost of all project tasks and resources is more of a general overview rather than a measure of variance. The projected cost at project completion pertains to forecasting and does not focus on any specific variance from the budget. The estimated cost of future project tasks refers to estimation practices rather than the performance measurement established by comparing actual and budgeted costs.