Within the realm of project management, the concept of variance analysis is a central one. Variance analysis is the means by which a group of certain variables (or elements that are subject to change) is broken down into its constituent parts, and the analysis of these parts is, in a way, refined. The goal is to determine the causes of a variance (that is to say, the difference between an expected result and an actual result). This kind of narrowed-down analysis can help the project management team identify precisely the factors that affect each element. Because it addresses each aspect contributing to a variance, variance analysis is an effective way to discover the sum causes of a result that differs from the result that was anticipated.
A project management team will focus on the variables of scope, cost, and schedule in its variance analysis. Each of these are affected by different factors, and, in order to figure out the nature of the variance as a whole, it is necessary to figure out why, exactly, each of the constituent elements varies from expectation.
This term is defined in the 3rd and the 4th edition of the PMBOK.