Variance analysis is important because it allows project managers to make informed decisions, optimize resource utilization, and ensure project success.
When practicing earned value management (EVM), project managers start with a time-phased project budget. Once the project is underway, performance is measured (actual costs and progress) against the budget. Variance measures the difference between what was planned to be performed and the actual results. The explanation of variance (EoV) is one of the formats found in the Integrated Program Management Report (IPMR) required by the government for large programs.