The schedule variance may be represented by hours, days, weeks, or even dollars.

As an example, consider a project that is scheduled to spend $100K for each of the first four weeks of the project. The actual expenditures at the end of week four are $325K. Therefore, BCWS = $400K and ACWP = $325K. From these two parameters alone, there are several possible explanations as to project status. However, if BCWP is now known, say $300K, then the project is behind schedule and overrunning costs.

Variances are almost always identified as critical items and are reported to all organizational levels. Critical variances are established for each level of the organization in accordance with management policies.

Not all companies have a uniform methodology for variance thresholds. Permitted variances may be dependent on such factors as:

• Life-cycle phase

• Length of life-cycle phase

• Length of project

• Type of estimate

• Accuracy of estimate

Variance controls may be different from program to program. Table 15-2 identifies sample variance criteria for program X.

For many programs and projects, variances are permitted to change over the duration of the program. For strict manufacturing programs (product management), variances may be fixed over the program time span using criteria as in Table 15-2. For programs that include research and development, larger deviations may be permitted during the earlier phases than during the later phases. Figure 15-10 shows time-phased cost variances for a program requiring research and development, qualification, and production phases. Since the risk should decrease as time goes on, the variance boundaries are reduced. Figure 15-11 shows that the variance envelope in such a case may be dependent on the type of estimate.

By using both cost and schedule variance, we can develop an integrated cost/schedule reporting system that provides the basis for variance analysis by measuring cost performance in relation to work accomplished. This system ensures that both cost budgeting and performance scheduling are constructed on the same database.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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