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Representative POMs are described for Variance Management at each level of maturity.

2Basic

• Practice

  Investigate some major budget variances.

  Outcomes

  • Budget variances are sporadically addressed.
  • The impact of corrective action may, however, be limited, as this approach may not yet be consistently applied.

  Metric

  % of budget variances addressed.

3Intermediate

• Practice

  Adopt a standardized and systematic process to deal with most budget variances based on post hoc analysis.

  Outcomes

  • Budget variances can be reviewed and corrective actions taken.
  • The impact of corrective actions to reduce costs or rebalance the budget is increasing.

  Metric

  % of budget variances addressed.

4Advanced

• Practices

  • Adopt a proactive approach to review and address budget variances based on spending patterns and trends.
  • Escalate all variances in the budget through defined resolution channels.

  Outcomes

  • Variance escalation provides increasing stakeholder awareness of budget variances and their involvement in variance resolution.
  • Corrective actions to reduce costs or rebalance the budget are almost always effective.

  Metrics

  • % of budget variances addressed.
  • % of budget variances escalated through defined resolution channels.

5Optimized

• Practice

  Automatically escalate and address budget variances using predefined policies.

  Outcomes

  • There is a continual focus on managing expenditure and business value, and promptly encouraging corrective action.
  • Defined budget tolerances can be applied in a balanced and flexible way, which leads to greater business value.

  Metrics

  • % of budget variances addressed.
  • % of budget variances escalated through defined resolution channels.
  • Ratio of budgeted to actual spend (1:1).