cost management - percentage cost variance

Submitted by vijayavadrevu on Fri, 03/29/2013 - 11:54

 WBS element Q  is ------- budget  by ----------- percent

 



WBS element

PV

EV

AC

P

$1000

$1100

$1150

Q

$2000

$1800

$2100

R

$1000

$1200

$1050

S

$2000

$1900

$1800

Ans is given as over budget by 16.67%

 

CV = EV-AC = 1800-2100 = -300

Hence over budget

% cost variance is (-300/2100)*100 = 14.28%. But the answer is given as 16.6%

Please confirm  % cost variance formula  

 

                

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sspawar

Fri, 03/29/2013 - 13:42

  (-300/1800)*100 = 16.6%

EV is base(reference) value

AC is variable

Renji2013

Fri, 03/29/2013 - 13:43

 


Hi this could be done like this ..


As you said, we need to calculate the % cost variance. Now, think, what should it be based on ? As you saw there is an over budget issue here.. over.. with respect to which value ?


Here we got 1800 back by investing 2100.  in otherways, for getting 1800 value we actually spent 2100. So the reference value to use is 1800.


 -300/1800 * 100 = 16.6 %


Renji


 

vijayavadrevu

Fri, 03/29/2013 - 18:16

 Thank You Renji and Pawar sir