The variance analysis is one of the central methods in project management and controlling. It makes it possible to compare planned values (target) with the actual results achieved (actual). This comparison helps to identify deviations at an early stage and to make the right decisions based on this.
What is a variance analysis?
“Comparison of target costs and actual costs arising over a specific period of time (actual costs) in the operating statement. Task of planned cost accounting. When using the same planned prices in debit and actual terms, the target/actual comparison corresponds to a comparison of the specified and consumed quantities, which can only be added up as a result.
The calculated cost variances are determined and analyzed taking into account the cost influencing variables and determining factors, i.e. attributed to their causes. This enables an interim [...] and inter-company comparison [...].” Gabler Business Encyclopedia
Why is the variance analysis essential?
New projects should meet the promised Success — Whether through efficiency gains, cost savings or increased customer satisfaction. The variance analysis ensures that these goals are not lost sight of by showing the following:
🚧 Discrepancies in resources: Become more or less resources used as planned?
💸 Budget overruns: Where do additional costs arise and how can they be compensated?
⏳ Project progress: Is the project located in Timetable, or are there a risk of delays?
The Importance in Project Controlling
In Project Controlling the variance analysis plays a key role. It provides the basis for decisions — whether adjustments to the project process, the application for an additional budget or even the termination of the project. Discrepancies between target and actual can have serious effects, particularly if project costs exceed the planned budget or if resource bottlenecks arise.
How does the variance analysis work?
The variance analysis comprises several phases, which are part of a comprehensive controlling control loop:
- Set and plan goals: Define clear Project goals and milestones.
- Develop planning: Create detailed Project plans for resources, time, and budget.
- Capture values: Set target values that represent the planned progress.
- Make a comparison: Comparison of target values with actual values.
- Variance analysis: Identify causes of discrepancies
- Establish measures: Develop corrective measures to optimize project progress
- Measure success: Verify the effectiveness of the measures.
Practical example: Efficient variance analysis with tools
In practice, creating a variance analysis often takes a lot of time — especially when working manually in various Excel tables. Tools like ZEP automate this process:
- Automatic data transfer: No manual entry of target and actual values.
- Real time overview: Current project progress at a glance.
- Individual adjustment: User-defined fields and reports.
ZEP: More than just a controlling tool
With the additional module, ZEP offers Project planning comprehensive functions that go far beyond the classic target/actual comparison:
Automated hourly and cost accounting
Compare planned and actual hours and costs with minimal effort.
Detailed project evaluations
Generate reports on resource utilization, budget status, and progress analyses.
Central Administration of Plan and Actual Data
Maintain an overview of all relevant project figures in one central location.
Dynamic planning adjustments
Change budgets, tasks, or resources in real time based on current data.
Integration and ease of use
ZEP can be seamlessly integrated into existing systems and is easy to operate thanks to an intuitive interface.
Benefits of automated variance analysis
Professional software provides you with a well-founded basis for making a target/actual comparison. The most important benefits are:
- 🕒 Saving time: Automatic data analysis instead of manual spreadsheet work.
- 📊 Accurate reports: Clear presentation of discrepancies and their causes.
- 🔍 Improved transparency: Real-time data for all project participants.
Conclusion
The variance analysis is essential for managing projects efficiently and successfully. Automated tools such as ZEP offer significant advantages and help to carry out complex analyses quickly and precisely. Use these options to keep track of your projects and make well-founded decisions.
FAQs
What is the purpose of a variance analysis in project management?
The variance analysis shows discrepancies between planned and actual project values, such as budget, time and resources. This allows you to take countermeasures early on to keep projects on track and achieve goals efficiently.
What are the advantages of tools such as ZEP for the variance analysis?
ZEP Automates Data Collection and provides real-time analyses and individual reports. This saves you time, increases transparency and provides you with precise bases for decision-making.
How is a variance analysis carried out?
First, target values are defined and actual values are continuously recorded. The two are then compared, deviations are analyzed and suitable measures are developed to optimize the course of the project.
