Variance thresholds – what is recommended?
The variance thresholds are vital to good variance reporting. It is important to establish reasonable variance thresholds that will cause problem analyses and narrative reports to be prepared. Careful selection of these thresholds is needed to prevent unnecessary work associated with preparing an excessive number of written analyses. The analysis of every cost and schedule variance is unnecessary and unproductive. It is advisable to use the project risks to assist in looking at the thresholds and aligning the thresholds to provide the most value. For example, if a contract includes design, test and evaluation, and production of many items, and the design and test and evaluation are seen as the risky areas, then it would make sense to have lower thresholds for these phases (triggering more variance reporting). The thresholds can also be set lower for particular WBS elements that are risky, e.g. software development. Setting of thresholds requires some thought by you and the project offi
