Variance Analysis

Variance analysis is a method used in project management to compare the real performance of a project to what was planned or expected, and to find and understand the reasons for any changes.

Usually, the following steps make up a variance analysis:

Setting the baseline: Project managers create a baseline plan that outlines the project’s scope, timing, money, and quality goals.

Collecting data: Project managers gather information about the project’s real performance, like how much it cost, how long it took to finish tasks, and how good it was.

When calculating variances, project managers compare the actual performance data to the basic plan and figure out the differences between the expected and real performance. These differences are called deviations.

Analyzing differences: Project managers look at the differences to find out what caused them and how they will affect the project’s general performance.

Taking corrective action: Project managers take corrective action based on the variance analysis to address the root reasons of the differences, get the project back on track, and stop similar differences from happening in the future.

Variance analysis is an important tool in project management because it lets project managers keep track of how the project is going, spot possible problems early on, and take appropriate action to keep the project on track. By looking at differences and taking steps to fix them, project managers can improve the results of the project, make it more efficient, and lower the risk of it failing.