What term describes the difference between a project's estimated costs and its actual costs?

The term that describes the difference between a project's estimated costs and its actual costs is known as cost variance. This concept is crucial in project management and financial analysis, as it measures how well a project adheres to its budget. A positive cost variance indicates that the actual costs are lower than estimated, suggesting efficient use of resources, while a negative cost variance denotes that the actual costs have exceeded the estimates, which could indicate potential budget issues or inefficiencies in the project execution. Understanding cost variance helps contractors and businesses to make informed decisions regarding project management and financial planning. It is essential for maintaining financial control and evaluating the overall performance of a project.