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Variance Analysis Thresholds

Variance Analysis Thresholds

EVM Terms Reviewed by forProject Technology - updated Oct 2026
Quick definition: Variance Analysis Thresholds are the amount and percentage criteria that determine when a Cost or Schedule Variance is significant enough to require formal written analysis rather than routine tracking.

Who sets the thresholds depends on the relationship. On government contracts they may be specified in the contract or set by the government program officer; on subcontracts they're agreed between the prime contractor and the subcontractor; on internal projects they may be set by the Project Manager or by company standards. Thresholds usually cover Cost Variance, Schedule Variance, and Variance at Completion (VAC), and usually combine an amount with a percentage, using either AND or OR logic (for example, ±$100K AND ±10%, or ±$100K OR ±10%).

What this means for you

Thresholds keep reporting effort focused on the variances that actually matter, instead of requiring a written report for every minor fluctuation. That lets management attention go to the cost and schedule issues most likely to affect the project's outcome.

Also known as
N/A
Used in
Variance Analysis Report

FAQ

Who sets the Variance Analysis Thresholds?
It depends on the relationship. On a government contract they are either specified in the contract or set at the discretion of the government program officer; on a subcontract they are agreed between the prime contractor and the subcontractor; and on internal work with no contractual requirement they come from the Project Manager or from company standards and conventions.
What variances do thresholds typically cover?
Cost Variance, Schedule Variance, and Variance at Completion. Thresholds commonly vary by magnitude and by level in the Work Breakdown Structure (WBS).
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