Budgeting is not static. Once execution begins, actual costs start to deviate from the planned values — hence, variance tracking becomes essential.

1. Accuracy Levels by Project Stage

2. Causes of Variance

• Scope changes or rework
• Market rate fluctuations
• Poor productivity or labor inefficiency
• Weather delays or unforeseen conditions
• Design errors or material shortages
  

3. Variance Control Techniques

• Regular Cost Reporting: Monthly budget vs. actual review.
• Trend Analysis: Tracking cumulative deviation patterns.
• Forecast at Completion (FAC): Predicting total project cost using real data.
  

EAC = BAC​ / CPI

(EAC = Estimate at Completion, BAC = Budget at Completion)

• Change Management: All cost deviations must be approved and documented.
• Cash Flow Monitoring: Ensure expenditure aligns with planned disbursements.

4. Continuous Improvement

Post-project review helps improve future estimate accuracy through historical data benchmarking and lessons learned.

Module Summary

• A budget is the financial expression of project scope and schedule.
• Linking cost, time, and work packages provides measurable control.
• Economic feasibility ensures financial sustainability through NPV and IRR.
• Owners focus on lifecycle value, while contractors focus on execution efficiency.

Continuous variance tracking and reporting maintain budget discipline.