Variance Analysis

Variance analysis is a key tool used in project management to keep track of and manage how a project is going. It involves comparing how the project actually turned out to how it was planned or expected to turn out. This is done to find any differences or variances.

In project management, the goal of variance analysis is to figure out what went wrong and fix it so the project can get back on track.

There are two main types of differences in project management –

1. 1. Differences in cost (Cost Variance)

When the actual cost of a project is different from what was planned or expected, this is called a cost variance.

1. 1. Differences in time (Schedule Variance)

When the actual schedule of a project is different from the planned or expected schedule, this is called a schedule variance.

The following steps are taken to do a variance analysis:

1. 1. Set up how the project is supposed to go, including the project’s scope, timeline, and budget.
   2. Use tools like progress reports, cost reports, and project management software to keep an eye on how the project is going.
   3. Compare how the project turned out to how it was planned or expected to turn out to find any differences.
   4. Analyze what caused the differences and decide if anything needs to be done to fix them.
   5. Do what needs to be done to get the project back on track.

Some things that can be done to fix problems caused by changes in cost or schedule are:

1. 1. Changes to the project’s goals
   2. Changing the schedule of the project
   3. Getting projects to cost less
   4. Adding more money to the project
   5. Adding more time time to the project

By using variance analysis, project managers can keep track of how their projects are going and take steps to make sure they stay on track and are finished on time and on budget.