Variance analysis compares budgeted costs to actual costs to identify discrepancies in a project’s financial performance. It helps project managers make necessary adjustments to keep the budget on track.

How Variance Analysis Helps Manage Project Costs

Regular variance analysis allows contractors to identify overspending or cost-saving opportunities early in the project. By comparing the projected budget to actual expenses, project managers can make informed decisions to bring the project back on track and ensure profitability.

Best Practices for Conducting Variance Analysis

Use financial management tools to run regular variance analysis reports, comparing actual spending with budgeted amounts. Frequent analysis allows for timely corrective actions, such as reallocation of funds or adjustments to the project timeline. Related Terms: Cost-to-Complete

FAQs

How often should variance analysis be performed?

A: Variance analysis should be conducted regularly, such as monthly or at key project milestones, to identify and address discrepancies early.

What is the main benefit of variance analysis?

A: Variance analysis helps project managers identify cost overruns or savings opportunities, allowing them to adjust the budget and maintain project profitability.

Variance Analysis Definition

How Variance Analysis Helps Manage Project Costs

Best Practices for Conducting Variance Analysis

FAQs

How often should variance analysis be performed?

What is the main benefit of variance analysis?

Just upload your starting project budget, and follow the financial progress in real-time