Variance Analysis

Variance Analysis is a critical technique in project management for understanding differences between planned and actual performance. It involves measuring, examining, and comparing deviations from the baseline schedule to assess project health. In PMI Scheduling Professional contexts, variance analysis primarily focuses on schedule and cost variances. Schedule Variance (SV) measures the difference between Earned Value (EV) and Planned Value (PV), indicating whether work is ahead or behind schedule. Cost Variance (CV) compares EV with Actual Cost (AC), revealing under or over budget performance. The Schedule Performance Index (SPI) and Cost Performance Index (CPI) are efficiency indicators. SPI = EV/PV shows schedule efficiency, with values below 1.0 indicating delays. CPI = EV/AC reflects cost efficiency, with values below 1.0 suggesting overspending. Effective variance analysis requires accurate data collection, regular monitoring, and proper interpretation. Project managers identify variance trends through techniques like Earned Value Management (EVM) and trend analysis, examining patterns over time rather than isolated data points. When significant variances occur, root cause analysis helps determine underlying factors. Common causes include scope creep, resource constraints, estimating errors, and external factors. Based on variance analysis, project managers implement corrective actions such as schedule compression, resource reallocation, or scope adjustment. They update forecasts using performance trends to predict final schedule and cost outcomes. Documenting variances and responses creates valuable historical information for future planning. Regular variance reporting to stakeholders ensures transparency and facilitates timely decisions. Ultimately, variance analysis allows schedulers to proactively manage deviations rather than reacting to crises, maintaining project control through informed decision-making.

Variance Analysis is a critical technique in project management for understanding differences between planned and actual performance. It involves measuring, examining, and comparing deviations from t…

Concepts covered: Schedule Variance (SV), Variance at Completion (VAC), Estimate at Completion (EAC), To-Complete Performance Index (TCPI), Variance Thresholds, Variance Analysis, Schedule Variance Percentage (SV%), Cost Variance Percentage (CV%), Cost Variance (CV)