Variance Management
Manage deviations of expenditure from the planned budget (by, for example, establishing escalation channels, and taking corrective actions).
Improvement Planning
Practices-Outcomes-Metrics (POM)
Representative POMs are described for Variance Management at each level of maturity.
- 1Initial
- Practice
- Rely on the best endeavours of assigned personnel.
- 2Basic
- Practice
- Report and investigate some variances.
- Outcome
- Budget variances are sporadically addressed.
- Metric
- % of budget variances addressed
- 3Intermediate
- Practice
- Systematically review all reported budget variances.
- Outcome
- Budget variances can be reviewed and corrective action taken.
- Metric
- % of budget variances reported and addressed
- 4Advanced
- Practice
- Measure, track and address budget versus actual spend for all stakeholders.
- Outcomes
- Tracking allows for stakeholders to apply corrective actions to realize business benefits.
- Proactive review and management of variances results in action taken to reduce cost / rebalance the IT budget.
- Metric
- % of projects where budgets are compared to actuals and corrective action taken to address any variances.
- Practice
- Escalate all variances in the budget through defined resolution channels.
- Outcome
- Variance escalation provides increasing stakeholder awareness of budget variances and their involvement in variance resolution.
- Metric
- % of budget variances reported successfully addressed.
- 5Optimized
- Practice
- Auto-manage budget variances with a continual focus on reducing both cost and risk.
- Outcome
- Defined budget tolerances can be applied in a balanced and flexible way, which leads to greater business value.
- Metric
- Ratio of budgeted spend to actual spend is approximately 1:1.
- Practice
- Auto-escalate variances to stakeholders.
- Outcome
- Stakeholders are immediately informed on variances to encourage prompt action.
- Metric
- % of budget variances reported and promptly addressed.