PPV (Purchace Price Variance)

Purchase Price Variance (PPV) is a metric used in procurement to measure the difference between the expected and actual cost of materials purchased. It is typically calculated using the formula (Actual Cost – Expected Cost)/Expected Cost, and is expressed as a percentage. PPV helps to identify when goods are being purchased at prices higher than expected, which can be an indication of missed opportunities or potential cost savings. By regularly monitoring its PPV, an organization can improve its purchase process and ensure that it is getting the best deal possible on its materials.