Variance is a quantifiable deviation, departure, or divergence away from a known baseline or expected value.
It is used to measure the difference between planned and actual performance, typically in terms of cost, schedule, or scope. Variance analysis helps project teams assess the magnitude of discrepancies and determine the need for corrective actions.
Key Characteristics
- Baseline-Driven – Compared against established benchmarks or expectations
- Quantitative – Expressed numerically, often in time or currency units
- Dual-Direction – Can be positive (ahead/under) or negative (behind/over)
- Supports Control Decisions – Informs adjustments to bring the project back on track
Example Scenarios
- Identifying a $10,000 cost variance due to material price increases
- Discovering a two-week schedule variance caused by late approvals
- Reporting a scope variance resulting from unapproved feature additions
Role in Performance and Forecasting
- Monitors Health of the Project – Detects early signs of issues or success
- Drives Root Cause Analysis – Investigates reasons for deviation
- Supports Forecasting – Informs projections like Estimate at Completion (EAC)
- Feeds Governance and Reporting – Essential for stakeholder updates and decisions
See also: Variance Analysis, Cost Variance (CV), Schedule Variance (SV), Baseline, Performance Measurement Baseline.