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What are the common causes and effects of schedule and cost variance in project management?

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Schedule and cost variance are two key indicators of project performance that measure the difference between the planned and actual values of time and budget. They can help project managers identify and address issues, risks, and opportunities in their projects. However, they can also have negative impacts on the project scope, quality, and stakeholder satisfaction if not managed properly. In this article, we will explore some of the common causes and effects of schedule and cost variance in project management, and how to avoid or mitigate them.

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1 Causes of schedule variance

Schedule variance (SV) is the difference between the earned value (EV) and the planned value (PV) of the project work, indicating whether the project is ahead or behind schedule. Poor estimation of the project duration, resources, and dependencies, unrealistic or unclear project scope and objectives, changes in the project scope, requirements, or priorities, inadequate risk management and contingency planning, delays or errors in the project activities, deliverables, or approvals, resource constraints, conflicts, or turnover, and external factors, such as weather, market, or regulatory changes, are some of the common causes of schedule variance.

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Nello P. Lopez

International Project Manager and Consultant. Investing on skills, experience, and attributes through philanthropreneurship. Matches best fit and talented freelance professionals ensuring highest quality results.
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In my experience the most challenging aspects of project management is control of external factors and management of resources. External resources such as manpower must clearly understand and comprehend scope, goals, and objectives of the project. Dedication to the project must be unconditional and permissible by their direct supervisor. Budget must be realistic at the utmost.

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2 Effects of schedule variance

Schedule variance can have various effects on the project, depending on its magnitude, direction, and duration. For instance, project costs may increase or decrease depending on whether the project is ahead or behind schedule. Similarly, project quality may be reduced or improved depending on whether the project is rushed or extended. Additionally, stakeholder satisfaction may be lowered or enhanced depending on whether the project meets or exceeds their expectations and needs. Furthermore, project risks may increase or decrease depending on whether the project faces more or less uncertainty and complexity. Lastly, project team morale may be improved or worsened depending on whether the project is challenging or boring.

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Raghav Singh

Data Scientist, Business Intelligence Developer and Informatics professional specializing in helping businesses contextualize and visualize large data sets
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When significant gaps exist between stakeholder expectations and the reality of the final product even a well-planned , well-managed and well-executed project will fail to be completed in time and satisfy requirements. We must know exactly what has been communicated to stakeholders, from the moment they were engaged until the project is complete, so that we can accurately understand expectations and make changes if they are not in accordance with project specifications The key features of the plan , deviations from standard practices or the agreement, as well as, novel features and any other possible points of contention or confusion, should be recorded and signed off on by both parties, before a plan of action is drafted.

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3 Causes of cost variance

Cost variance (CV) is the difference between the earned value (EV) and the actual cost (AC) of the project work, indicating whether the project is under or over budget. Poor estimation of the project costs, resources, and dependencies, unrealistic or unclear project scope and objectives, changes in the project scope, requirements, or priorities, inadequate risk management and contingency planning, errors or rework in the project activities, deliverables, or approvals, resource inefficiencies, wastage, or overruns, and external factors, such as inflation, exchange rates, or supplier changes, are some of the common causes of cost variance.

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4 Effects of cost variance

Cost variance can have various effects on the project, depending on its magnitude, direction, and duration. For instance, a project may be under or over budget, resulting in reduced or increased profitability. Additionally, stakeholder satisfaction may be lowered or enhanced, depending on whether the project delivers value for money and meets their expectations and needs. Furthermore, project risks may be increased or decreased, depending on whether the project has more or less financial cushion and flexibility. Moreover, project team morale may be improved or worsened, depending on whether the project is rewarding or stressful. Lastly, the project reputation may be enhanced or damaged, depending on whether the project is seen as successful or failed.

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5 How to avoid or mitigate schedule and cost variance

Schedule and cost variance are inevitable in any project, but they can be avoided or mitigated by following some best practices. This includes conducting a thorough and realistic project planning, estimation, and scoping process, as well as establishing a clear and agreed project baseline, scope, and objectives. Additionally, it is important to implement a robust and proactive risk management and contingency planning process, and to monitor and control the project progress, performance, and changes. Furthermore, it is essential to communicate and report the project status, issues, and variances to the relevant stakeholders, and to take corrective and preventive actions to address the root causes and impacts of the variances. Finally, it is beneficial to learn from the project experience and apply the lessons learned to future projects.

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What are the common causes and effects of schedule and cost variance in project management?

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1 Causes of schedule variance

2 Effects of schedule variance

3 Causes of cost variance

4 Effects of cost variance

5 How to avoid or mitigate schedule and cost variance

Project Management

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What are the common causes and effects of schedule and cost variance in project management?

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1 Causes of schedule variance

2 Effects of schedule variance

3 Causes of cost variance

4 Effects of cost variance

5 How to avoid or mitigate schedule and cost variance

Project Management

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