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Variance responses

Once you have identified a difference between what is planned in terms of progress or costs with what is actually achieved, you will need to respond.

You have three options:

  1. Ignore it and do nothing, if the variance is acceptable.
  2. Take corrective actions, such as:
    • Reconsider use of slack time: it may be possible to make more use of slack time in the schedule to speed up the completion of tasks. For example, where you had planned that finding and booking the right venue might take a month, finding a venue within a week means you can move on to other tasks earlier too.
    • Remove or reduce contingencies from estimates. As the project work progresses, you could review the contingency time and budgets that you had originally estimated based on actuals and progress against milestones. For example, you were not sure how much the venue booking fee would be; once you have booked the venue and are certain of the fee, you do not need any contingency.
    • Re-evaluate the dependencies of activities, modifying the Gantt chart. This might have an impact on the duration of the project and requires rearranging how resources are used. For example, think about a project to organise an annual company meeting, where the same person is responsible for preparing the handouts to be printed internally, then for designing a glossy brochure which is going to be sent to external printers who set a production deadline. If the handouts ended up taking longer than expected, their preparation could be extended or delayed to allow the scheduled preparation of the brochure. The new timescale for the handouts would need to be reflected on a revised Gantt chart and its effects on dependencies checked using the CPM. Otherwise you might unwittingly change the critical path of the project.
    • Increase the resources available. This will usually increase the costs as well, so this should be considered alongside other options. It may be possible to increase resources at a limited cost by reviewing the use of existing staff. If increasing resources means that the benefits of the project are achieved sooner, the increased costs can potentially be offset against a swifter end to the project. Nevertheless, besides the costs of the new resources, someone who is already a part of the project team needs to brief any new team members and the project team itself needs to adapt to the new situation before it can return to working to full capacity. This would require time and commitment – another source of costs.
    • Negotiate longer timescales. An unanticipated problem may cause a delay that cannot be recovered. If this is the case, it is worth calculating whether lengthening the timescale would be more cost effective than increasing the resources to enable completion on time.
    • Make use of the available activity floats: when activities are not on a critical path, it is possible to use the available floats to complete them. Having a float means that you can delay the beginning of an activity or prolong its duration. You can calculate floats using the critical path method presented in Week 2. For instance, if the negotiation with the catering company is taking longer than you planned, but it is not a critical activity, you could extend its duration without affecting the overall duration of the project. It may also happen that an activity is completed before the planned finish date. This makes it possible to use the saved time for other activities. For example, where you had planned a week to find the right venue but achieve it in two days, you can move on to the next task earlier.
  3. Cancel the project or re-evaluate its scope. If the possibility to accomplish project objectives successfully, in time and budget constraints, is compromised, cancelling the project becomes an option. Think about the space shuttle launches: if one component is faulty, the launch must be aborted. You can either reconsider the value that additional features will bring to the majority of stakeholders or review the whole project.

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Business Fundamentals: Project Management

The Open University

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