Description: Budget variance in project management refers to the difference between the amount that was budgeted for a project and the amount that has actually been spent. This concept is crucial for financial control and project performance evaluation, as it allows managers to identify deviations and make informed decisions to correct the course. A positive variance indicates that less has been spent than expected, which can be a sign of efficiency, while a negative variance suggests that costs have exceeded expectations, potentially leading to the need for adjustments in planning or project execution. Budget variance is commonly measured through metrics such as the Cost Performance Index (CPI), which helps managers assess the financial health of the project in real-time. This analysis is not only fundamental for cost management but also influences strategic decision-making, resource allocation, and communication with stakeholders. In a project environment, where changes are frequent and estimates can be difficult to foresee, budget variance becomes an essential tool to ensure that projects remain within established financial limits.
