Introduction
As a project manager, it is crucial to keep track of your project’s performance to ensure its success. One way to do this is by calculating project cost, time, and schedule variances. These variances help you identify deviations from the planned budget, timeline, and schedule, allowing you to take corrective actions promptly.
Understanding Project Variances
Before diving into the formulas and examples, let’s first understand what project variances are. In project management, variances refer to the difference between the planned and actual values of cost, time, and schedule. Positive variances indicate that the project is ahead of schedule, under budget, or completed earlier than expected. Conversely, negative variances indicate that the project is behind schedule, over budget, or taking longer than planned.
Calculating Cost Variance (CV)
Cost variance is a measure of the difference between the earned value (EV) and the actual cost (AC) of the project. It helps you determine if the project is within budget or not. The formula to calculate cost variance is:
CV = EV – AC
For example, let’s say the EV of your project is $10,000 and the AC is $12,000. By plugging these values into the formula, we get:
CV = $10,000 – $12,000 = -$2,000
This negative cost variance indicates that the project is over budget by $2,000.
Calculating Schedule Variance (SV)
Schedule variance measures the difference between the earned value (EV) and the planned value (PV) of the project. It helps you determine whether the project is ahead of or behind schedule. The formula to calculate schedule variance is:
SV = EV – PV
For example, let’s say the EV of your project is 80% and the PV is 90%. By plugging these values into the formula, we get:
SV = 80% – 90% = -10%
This negative schedule variance indicates that the project is behind schedule by 10%.
Calculating Time Variance (TV)
Time variance measures the difference between the earned value (EV) and the planned duration (PD) of the project. It helps you determine if the project is taking longer or shorter than planned. The formula to calculate time variance is:
TV = EV – PD
For example, let’s say the EV of your project is 25 days and the PD is 30 days. By plugging these values into the formula, we get:
TV = 25 days – 30 days = -5 days
This negative time variance indicates that the project is taking 5 days longer than planned.
Conclusion
Calculating project cost, time, and schedule variances is essential for project managers to assess the project’s performance and make informed decisions. By using the formulas provided in this guide and analyzing the resulting variances, you can identify deviations from the planned values and take appropriate corrective actions to keep your project on track.
