What role does variance analysis play in budgeting and cost control?
- It compares actual costs with budgeted costs
- It forecasts project costs based on historical data
- It assigns tasks to each team member independently
- It ignores budgeted costs and focuses on actual costs
Variance analysis involves comparing actual costs with budgeted costs to identify discrepancies. It helps in understanding where and why deviations occur, enabling proactive adjustments to control costs and improve budget accuracy throughout the project lifecycle.
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