Measuring of Deviation of Planned Budget

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Oana Boteanu asked January 29, 2015

This indicator is for measuring the deviation of the planned budget of a project. In other words, this looks at the difference between the planned baseline cost and the actual project cost.

Companies aim to minimize this KPI, as a high deviation implies a higher cost and lower ROI for the project.

This KPI can also be linked with the Deviation of Planned Schedule KPI, and normally a high schedule deviation involves a higher budget deviation.

Project managers are responsible for managing the budget deviation and ensuring that all contingencies plans are made to avoid any fluctuation in budget.

Formula:
Actual budget/ Planned Baseline x 100

KPI Units: %

KPI Time Frame: update at the end of project

If a company allocated $10 000 to a refurbishment project, where $5000 are allocated to staff, $3000 to material and $2000 for other costs.

However, the project manager realized half way through the project, half of the material has been damaged (water licking) and new one needs to be purchased, for a extra price of $1500.

The budget deviation is:
(Actual budget – Planned Budget) / Actual budget x 100 =
(11500 – 10 000)/ 11500 x 100 = 13 %

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