What is the purpose of variance analysis in project management?

Variance analysis plays a critical role in project management by assessing the differences between planned and actual project performance. This process allows project managers to identify variances in key performance indicators, such as cost and schedule, which can significantly impact the project's overall success. By examining these discrepancies, project managers can understand the causes of the variances and take corrective actions if needed.

This method ultimately helps ensure that the project remains aligned with its objectives and can potentially lead to successful project delivery. Understanding the reasons behind the performance gaps enables managers to make informed decisions, adjust timelines, reallocate resources, or implement mitigation strategies, enhancing the project's likelihood of success.