Back to lesson
1. What is a cost variance?
Cost variance occurs when the ROI is different from the ROS.
Cost variance occurs when the actual costs that occur for an activity and timeframe are different than what was planned.
Cost variance occurs whenever the OpPlan is changed.
2. What are the conditions that will require a manager to write a variance report for a cost variance?
A variance report is written whenever there is an overrun.
A variance report is written during the annual budgeting process to explain why the requested budget has changed from the previous year.
A variance report is written whenever the variance from a monthly cost report exceeds either the percentage or absolute value threshold.
3. How does a schedule variance impact cost variance?
A schedule variance will require overtime or expedited work to recover which will lead to a cost variance.
Schedule variances and cost variances are independent of each other. There is no effect.
If an activity happens in a different month than planned, the schedule variance will result in an overrun in the month that the activity occurred and an underrun in the month when the activity was planned.
Back to the top
© 2017 GoSkills Ltd.
Skills for career advancement