Measuring of Deviation of Planned Budget

Answer QuestionsCategory: ManagementMeasuring of Deviation of Planned Budget
Oana Boteanu Staff asked 3 years ago

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 %


Software for your KPIs

bscdesigner-100x100 Manage your KPIs and visualize them on dashboards and strategy maps with professional cloud-based Balanced Scorecard software.

10-Step System to Find Tailor-Made Key Performance Indicators

kpi-system-240

Examples of KPIs

It is easier to get started with KPIs when you have some good examples to follow. Find here examples of KPIs for various domains.

Winning KPI Crash Course

premium-bsc-training Even the best KPIs won't change anything if they are not properly aligned with a business context, if a company's strategy is not well defined, if there is no clear understanding about what the company is measuring and way...

Check out a "crash-course" for the Balanced Scorecard and KPIs.

Find us on Google Plus