Budgeting is not static. Once execution begins, actual costs start to deviate from the planned values — hence, variance tracking becomes essential.
1. Accuracy Levels by Project Stage
2. Causes of Variance
- Scope changes or rework
- Market rate fluctuations
- Poor productivity or labor inefficiency
- Weather delays or unforeseen conditions
- Design errors or material shortages
3. Variance Control Techniques
- Regular Cost Reporting: Monthly budget vs. actual review.
- Trend Analysis: Tracking cumulative deviation patterns.
- Forecast at Completion (FAC): Predicting total project cost using real data.
EAC = BAC / CPI(EAC = Estimate at Completion, BAC = Budget at Completion)
- Change Management: All cost deviations must be approved and documented.
- Cash Flow Monitoring: Ensure expenditure aligns with planned disbursements.
4. Continuous Improvement
Post-project review helps improve future estimate accuracy through historical data benchmarking and lessons learned.
“Variance control is not about blame — it’s about early detection and corrective action.”
Module Summary
- A budget is the financial expression of project scope and schedule.
- Linking cost, time, and work packages provides measurable control.
- Economic feasibility ensures financial sustainability through NPV and IRR.
- Owners focus on lifecycle value, while contractors focus on execution efficiency.
Continuous variance tracking and reporting maintain budget discipline.