Variance Analysis & Reporting

What variance analysis is

If the S-curve (Lesson 7) shows the gap and the EAC (Lesson 8) forecasts where it leads, variance analysis is the diagnosis in between: quantifying each gap, judging its significance, finding the cause, and feeding corrective action. It's the analytical core of the control loop's "compare" and "act" steps.

Cost variance and schedule variance

In earned-value terms, two variances come from the three numbers (PV, EV, AC) you met in Foundations:

• Cost variance — Earned value minus actual cost. Negative = over budget (you spent more than the work was worth).
• Schedule variance — Earned value minus planned value. Negative = behind schedule (you've earned less than planned).

Variance calculator

Enter planned value, earned value, and actual cost to see the cost and schedule variances, their percentages, and whether they cross a typical significance threshold:

Thresholds, root cause & reporting

You can't chase every tiny variance — so projects set variance thresholds (e.g., ±10% or a dollar limit) that trigger a formal variance analysis report explaining the cause and the corrective action. Below the threshold, a variance is monitored; above it, it must be explained and addressed.

• Set thresholds — Define what size of variance is "significant" — focusing attention on what matters, not noise.
• Find the root cause — For each significant variance, determine why — not just that it happened, but what drove it.
• Define corrective action — State what will be done to address it — turning analysis into management response.
• Report by exception — Surface the significant variances clearly, so leadership attention goes to the real problems.

Ten things to remember

1. Variance analysis measures, explains, and acts on plan-vs-actual differences.
2. A variance is a question, not a verdict — the value is in the diagnosis.
3. Four steps: measure → significance → root cause → corrective action.
4. CV = EV − AC (cost); SV = EV − PV (schedule).
5. Negative is unfavourable for both — over budget or behind schedule.
6. Always pair the dollar with the percent — % tells you if it's significant.
7. Set variance thresholds that trigger a formal analysis report.
8. Find the root cause — why it happened, not just that it did.
9. Report by exception — highlight the few that matter, with causes and actions.
10. It's the diagnosis between the S-curve and the EAC — compare and act.