Detail Cost Variance Analysis

Abstract

Almost all cost control systems that are used by construction companies today have one thing in common, in which they can not provide the information that show how much each department in the company should respond for the existing variance. The following are list of the department responds for unit cost for resource productivity, the purchase (or personnel) department responds unit cost of resource and the estimate department responds for estimate quantity.

To allocate the cost variance to each department cprrectly, the detail cost variance analysis is necessity. This paper demonstrates 7 detail variances that build up to be the cost variance. Furthermore, this paper also presents one way to allocate the cost variance by base on the variance orgin.