In some cases a favorable variance can be as bad or worse than an unfavorable variance on control chart so how to avoid potential problems with the use of standard costs and the use of management by exception principle? Saving Changes...
Effective estimation using multiple approaches (e.g. top-down & bottom-up), not committing to schedule or cost baselines till you and the team are confident about your plans, and disciplined risk management are three ways to reduce variation.
Kiron Saving Changes...
Rajeev SharmaPrincipal Consultant | Strategy, EA CoE | Digital Transformation, AI and Gen-AI| Tech MahindraGurgaon, Haryana, India
If risk encountered in baseline plan in early stage, which extrapolating to variances than mitigate them in between with valid reason and re-baseline project. This approach can avoid potential problem and bring in sync stakeholders by executing communication plan of newly baseline project.
As comments above, and treat a favourable variance just the same as an unfavourable one, in terms of exception reporting.
However, a favourable one can also be an opportunity- so when reporting it that is a good time to also suggest a way it could be used to benefit the project's objectives further.
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1 reply by Stéphane Parent
Dec 07, 2017 9:44 AM
Stéphane Parent
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The trick, Tim, is to leave yourself some margin to finish the project. Using early savings can bite you in the end.
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Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
Dec 07, 2017 9:18 AM
Replying to Tim PM
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As comments above, and treat a favourable variance just the same as an unfavourable one, in terms of exception reporting.
However, a favourable one can also be an opportunity- so when reporting it that is a good time to also suggest a way it could be used to benefit the project's objectives further.
The trick, Tim, is to leave yourself some margin to finish the project. Using early savings can bite you in the end.
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1 reply by Tim PM
Dec 08, 2017 4:19 AM
Tim PM
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But Stephane, don't all our projects always have enough contingency funds for those times too, Finance Depts always being very helpful with things like that? Or maybe I am dreaming!
The trick, Tim, is to leave yourself some margin to finish the project. Using early savings can bite you in the end.
But Stephane, don't all our projects always have enough contingency funds for those times too, Finance Depts always being very helpful with things like that? Or maybe I am dreaming! Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
Your contingency funds, Tim, should be to cover triggered risks, not to cover performance variations over the course of the project.
You may be ahead one month and behind the next. Hopefully, the cumulative effect should even out. Saving Changes...
