Variance Analysis is a fundamental technique used in project management to measure and report progress by comparing the planned performance against the actual performance. It involves calculating the differences (variances) between the baseline plans (such as the project schedule or budget) and the…Variance Analysis is a fundamental technique used in project management to measure and report progress by comparing the planned performance against the actual performance. It involves calculating the differences (variances) between the baseline plans (such as the project schedule or budget) and the actual results at specific points in time. In the context of scheduling, Variance Analysis helps project managers identify deviations from the planned schedule, enabling them to understand whether the project is ahead or behind schedule.
By conducting Variance Analysis, project managers can pinpoint areas where performance is not meeting expectations, investigate the causes of variances, and implement corrective actions. This analysis is crucial for controlling the project schedule and ensuring that the project stays on track. It involves reviewing schedule performance data, such as start and finish dates, durations, and resource utilization, to assess how actual progress compares to the schedule baseline.
Variance Analysis often uses metrics such as Schedule Variance (SV), which quantifies the difference between the Earned Value (EV) and the Planned Value (PV). However, even outside of EVM, Variance Analysis can involve comparing actual task completion dates to planned dates and calculating delays or gains in schedule performance. Regular Variance Analysis helps in early detection of schedule slippages, allowing for timely interventions.
The insights gained from Variance Analysis are essential for effective communication with stakeholders, as they provide objective data on project performance. This information can be presented in reports, dashboards, or visual formats like charts and graphs, making it easier to understand trends and patterns. Ultimately, Variance Analysis supports proactive project management by highlighting areas that require attention, thus enhancing the likelihood of project success.
Variance Analysis: Comprehensive Guide for PMI-SP Exam
What is Variance Analysis?
Variance analysis is a crucial project management technique that involves comparing planned performance against actual performance to identify, analyze, and explain differences (variances). In the context of the PMI-SP (Project Management Institute - Scheduling Professional) exam, variance analysis focuses specifically on schedule variances - the differences between planned schedule activities and actual progress.
Why Variance Analysis is Important
Variance analysis serves as an early warning system for project managers, enabling them to:
• Identify schedule deviations before they become critical • Determine root causes of delays or accelerations • Make informed decisions about corrective actions • Communicate project status to stakeholders with evidence-based data • Learn from past variances to improve future schedule estimates • Maintain project control through systematic monitoring
How Variance Analysis Works
1. Calculate Schedule Variance (SV) SV = Earned Value (EV) - Planned Value (PV) • Positive SV: Ahead of schedule • Negative SV: Behind schedule • Zero SV: On schedule
2. Calculate Schedule Performance Index (SPI) SPI = EV / PV • SPI > 1: Ahead of schedule • SPI < 1: Behind schedule • SPI = 1: On schedule
4. Develop Corrective Actions Based on variance analysis, project managers might: • Fast-track activities (perform in parallel) • Crash the schedule (add resources) • Re-baseline the schedule • Modify scope • Implement schedule compression techniques
5. Document and Report Document variances, causes, and corrective actions for: • Historical record-keeping • Stakeholder communication • Future project planning
Exam Tips: Answering Questions on Variance Analysis
Key Concepts to Master:
• Earned Value Management (EVM): Understand how EV, PV, and AC relate to schedule variance
• Schedule Variance Formulas: Memorize SV and SPI calculations and what positive/negative values indicate
• Trend Analysis: Be able to interpret variance trends over time, not just at a single point
• Corrective Actions: Know which responses are appropriate for specific variance scenarios
• Reporting Formats: Understand S-curves, control charts, and other visual representations of variance
Question Strategies:
• Look for mathematical calculation questions requiring you to determine if a project is ahead/behind schedule
• Expect scenario-based questions where you must identify appropriate corrective actions based on variance data
• Watch for questions testing your understanding of variance thresholds and when management escalation is required
• Pay attention to questions about variance communication - who needs to know what and when
• Be prepared for questions about integrating schedule variance with cost variance analysis
Common Traps to Avoid:
• Confusing schedule variance with cost variance
• Misinterpreting positive and negative variance values
• Rushing to extreme corrective measures for minor variances
• Focusing on the numbers alone rather than their practical implications
• Recommending solutions before adequately analyzing root causes
Remember that variance analysis in the PMI-SP context is primarily focused on schedule management rather than general project management. Questions will test your ability to identify, analyze, and respond to schedule deviations specifically.
A project has a planned value of $75,000, an actual cost of $70,000 and earned value of $80,000. As a project manager, how would you interpret these data?
Question 2
During a project status meeting, the earned value is calculated to be $120,000, the planned value is $110,000, and the actual cost is $115,000. What would be your immediate action as a project manager?
Question 3
A project manager overseeing a large construction project observes through variance analysis that over the past few reporting periods, the Schedule Variance (SV) has been consistently improving but remains negative, indicating the project is still behind schedule. Simultaneously, the Cost Variance (CV) has started to deteriorate and is now negative, showing the project is over budget. What should the project manager do next?
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