In construction projects, variance refers to a difference in anything. This difference usually happens between the expected and actual cost and time. When we play a construction project, we estimate how much money and time will be required, but when the project starts, these estimates commonly change. These changes or variance, help us understand the project’s performance and also suggest if the project is progressing according to its plan or not.
In this article, we will try to understand variance in an easy way so that construction projects can be managed more successfully.
Definition of variance:
In construction, variance refers to the difference between what we planned and what actually happened. This difference can happens in two areas:
- Cost Variance (CV): This refers to the difference between the estimated cost for the project and the actual cost. If the actual cost is higher than the estimated cost, it is a negative variance and if the actual cost is lower, it is a positive variance.
- Schedule Variance(SV): This refers to the difference between the estimated time and the actual progress of the project. If the work is delayed compared to the planned time, it is a negative variance.
Types of Variance in Construction:
- Cost Variance (CV):
Cost variance happens when there is a difference between the actual cost and the planned cost. If the construction work becomes more expensive than planned, it is a negative variance and if it costs less, it is a positive variance.
- Schedule Variance (SV):
Schedule variance happens when the project work is in front of or behind the planned time. If the project is delayed measured to the planned time, it is a negative variance.
- Quality Variance:
Quality variance happens when the construction work falls below the quality standards. If the quality of the work is less than expected, it is also a variance that can affect the long term performance of the project.
- Scope Variance:
Scope variance happens when there is a change in the original scope of the project, such as design changes or additional work. This leads to changes in both the cost and time of the project.
Causes of Variance:
- Poor Planning: If the project is not planned properly, it can lead to variance in cost and time. Correctness in planning is very important.
- Changes in Scope: If there are changes in the project scope, such as additional work or design changes, it can affect both the cost and time.
- Material Price Changes: Material price change in the market. If prices increase unexpectedly, it can cause cost variance.
- Labor Shortage: If there is a shortage of labor, the work will be delayed, which can lead to schedule variance.
- Unplanned Site Conditions: Sometimes, there are unexpected conditions at the construction site, such as weather issues or soil problems, which can delay the project and increase the cost.
- Poor Communication: If there is poor communication among the project team members, misunderstandings can happen, which can affect both the cost and time.
How to Manage Variance:
- Regular Monitoring:
It is very important to regularly monitor a construction project. If you continuously track time and cost, you can quickly see which direction the project is heading and handle any variance in time to stop issues.
- Accurate Forecasting:
Project managers should make accurate estimates of future costs and timeframes. This allows you to expect any potential variances and prepare for it in advance.
- Risk Management Plan:
Creating a risk management plan is also important. You should identify every potential risk, such as changes in material prices, labor issues, weather doubts and prepare emergency plans for those risks.
- Change Control Process:
Any changes in the project scope should be formally documented and their effects rated. This process helps in managing scope variance successfully.
- Communication:
Effective communication within the project team is key to solving any issue quickly. Every team member should have clear responsibilities, and any problems should be discussed and addressed quickly
- Accurate Documentation:
In construction projects, accurate documentation is very important when managing variances. It is important to document every change, difference or issue so that it can be tracked later. If a variance happens, keeping a detailed record helps project managers make informed decisions in the future.
Documentation makes it easier to find solutions to any problem and ensures that all clients receive proper updates. It establishes a transparent process for the project and increases responsibility.
- Timely Corrective Actions:
When a variance is detected, taking timely corrective actions is very important. If the variance is not addressed on time, it can disturb the overall schedule and budget of the projects. Corrective actions may include changes in processes or workflows, dividing additional resources or adjusting project priorities. Project managers must ensure that any action taken reduces the impact of the variance and keeps the project on track.
- Resource Optimization:
Resource optimization is also important when managing variances. If a variance happens, it can impact the distribution and use resources. Project managers need to secure the best use of resources while protecting that the supply chain runs smoothly.
Resource optimization increases the performance of the project and helps prevent unnecessary delays and cost increases. Effective resource management plays an important role in controlling variances.
- Lesson Learned Analysis:
In construction projects, it is important to learn from past variances. Through lessons learned analysis, you analyze previous variances and their resolutions to avoid repeating these mistakes in the future.
This analysis helps project managers make better decisions and improve planning. If a variance occurs in any project, analyzing it and learning from it helps in managing the project better in the future.
Conclusion:
Variance in construction projects is a normal situation, but if it is managed properly, the project can be completed within the sharing time and budget. It is important to track cost and schedule variance, improve planning and adopt risk management techniques to improve project performance. By following these steps, you can manage your construction projects resourcefully and successfully complete them.