What inputs does a project manager use to calculate the cost variance of a project?

To calculate the cost variance of a project, a project manager uses three critical inputs: planned value, earned value, and actual cost.

Planned value refers to the budgeted amount for the work that was supposed to be completed by a certain point in time. It provides a baseline against which the project's progress and performance can be measured.

Earned value indicates the value of the work that has actually been completed at a specific point in time, representing the budget associated with that completed work. This metric helps to assess whether the project is on track regarding its objectives and financial plan.

Actual cost refers to the actual expenditure incurred for the work that has been completed thus far. It is vital for determining the real cost implications of the project.

Cost variance is determined using the formula: Cost Variance = Earned Value - Actual Cost. This shows whether the project is under or over budget at that point in time. Collectively, these three inputs provide a comprehensive view of the financial performance of the project, allowing the project manager to make informed decisions based on current project status and budget management.