Managing Variances
Managing the variance from your project baseline is sound PM practice. Here are tips to determine acceptable triple constraint variances (scope, time, and cost) for your project:
Examine your company’s behavior. Your business is likely to have common approaches for managing scope, time, and costs. Your project should conform to those norms for tolerating scope changes, schedule slippage, or budget overruns. While some businesses focus on maintaining a tight budget and schedule, others, due to intense competition in the marketplace, may focus on fulfilling scope, even if it means going over budget or behind schedule. In other business environments, schedule is critical. Government laws that go into effect on a certain date must have supporting systems and processes ready to go when a law is enacted.
Scheduled events will affect acceptable variance. Many businesses work on marketing release schedules, so products need to be ready for demonstration at key trade shows or other marketing events. Little to no schedule slippage is tolerable in these instances. There may be some tolerance for scope reduction however, if the product still meets market expectations.
Cost savings as a project outcome will affect your variance targets. There is likely to be little to no tolerance for budget overruns when cost savings is the project justification. However, if the cost savings come from improved processes or low-cost product production, scope may be the constraint where variances are unacceptable. Process changes that form the project scope may need to be unchanged to fulfill the cost savings objectives. In some cases, increasing the budget may be acceptable to ensure the long-term cost savings are achieved.
As you approach the end of your project, acceptable schedule variance tends to be tightened. This is because you have less time to recover from any delays. Budget constraints may tighten as well. If you are under budget, however, your ability to accept cost overruns for specific tasks may improve toward the end of your project. Be careful however – just because you are under budget doesn’t mean you can overspend on a given item – management may be counting on the excess allocated funds to apply to another project.
For more about managing variances, check out my Project Management Foundations course.
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