Scribd
Upload
4 views12 pages

Managing Project Cost Variance

The presentation discusses project cost variance, defining it as the difference between budgeted and actual costs, and emphasizing its importance for financial health and decision-making. It outlines influencing factors such as scope creep, resource issues, and estimation errors, along with strategies for calculation, interpretation, and management. Additionally, it highlights preventive strategies, corrective actions, real-world examples, and cost control tools to enhance project efficiency.

Uploaded by

bhushanpa311003
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
4 views12 pages

Managing Project Cost Variance

The presentation discusses project cost variance, defining it as the difference between budgeted and actual costs, and emphasizing its importance for financial health and decision-making. It outlines influencing factors such as scope creep, resource issues, and estimation errors, along with strategies for calculation, interpretation, and management. Additionally, it highlights preventive strategies, corrective actions, real-world examples, and cost control tools to enhance project efficiency.

Uploaded by

bhushanpa311003
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Navigating Project

Cost Variance

Present by – Tejasvini Bhamare


PRN - 230102311010
Navigating Project Cost
Variance
This presentation outlines project cost variance. We will explore its
causes and impacts. We will also cover proven management
strategies.
Understanding Cost Variance
Definition Importance Impact

Cost Variance (CV) is the difference CV indicates project financial CV affects profitability and
between budgeted cost and actual health. It enables informed stakeholder confidence. It signals
cost. decision-making. potential problems.
Influencing Factors
1 Scope Creep 2 Resource Issues
Uncontrolled changes Unexpected rates or
expand project shortage of resources.
boundaries. This This impacts budgets.
increases costs.

3 Estimation Errors
Inaccurate forecasts of materials or labor. This leads to
variances.
Calculating Cost Variance
EVM Framework
Earned Value Management integrates scope and
schedule data.

CV Formula
CV = Earned Value (EV) - Actual Cost (AC). This is a
key calculation.

Performance Measurement
Regular CV calculations track project performance.
Interpreting CV Results
Positive CV Negative CV
Project is under budget. Project is over budget.
Efficiency is better than Inefficiency is worse than
expected. anticipated.

Trend Analysis
Monitor CV trends over time. This predicts future performance.
Root Cause Analysis
1 Data Collection
Gather relevant financial data and project reports.
Review carefully.

2 Identify Causes
Pinpoint factors contributing to cost overruns. Use
fishbone diagrams.

3 Validate Findings
Verify root causes. Conduct interviews and perform
analyses.
Preventive Strategies

Scope Budget Planning Resource


Management Allocation
Detailed cost
Clearly define estimates and Optimize resource
project scope. contingencies. use. Monitor
Implement change Thorough planning. availability
control. regularly.
Corrective Actions
Re-Baseline
1 Reset project plan.

Negotiate
2
Reduce contract costs.

Resource Shift
3
Reassign personnel.
Real-World Examples

Construction Success Software Failure


Effective scope management prevents overruns. Poor resource planning causes budget problems.
Cost Control Tools

2 Project Software

1
Spreadsheets

BI Dashboards
3

These tools allow for detailed tracking and reporting. This information provides valuable insights. Utilize these
technologies for efficiency.

You might also like