Plan-vs-Actual Variance

The Plan-vs-Actual Variance is the difference between planned values, such as budget or forecast, and the actual values incurred in a period. It shows where reality deviates from the plan and is thus the central steering metric of cost controlling.

Variance analysis breaks the difference down into causes, typically price, volume and mix effects. In IT, variances frequently arise from changed consumption volumes, postponed projects, contract or price changes and incorrect allocation keys. An example: with a budget of €90,000 and Actual Costs of €102,000, the variance is +€12,000 or +13 percent. On this basis, measures are defined and the Forecast is adjusted.

A note on terminology: in statistics, variance denotes a measure of dispersion; in controlling, variance means the deviation described here. Regular, cause-oriented variance analysis is one of the core routines of IT controlling.