You are the project manager for a large infrastructure project. During your project’s execution, you notice that the actual costs are consistently exceeding the cost baseline. Before taking corrective actions, what should you do first to understand the nature and cause of the deviations?
Request additional funds to cover the increased.
Improve team performance to reduce labor costs.
Adjust the cost baseline to accommodate the increased costs.
Conduct a Variance Analysis to identify the cause of the cost deviations.
When actual costs exceed the cost baseline, it is imperative to first perform a Variance Analysis to understand the root cause of the deviations. This analysis will help determine whether the variances are within the threshold limits or if there is a trend that could impact future performance. Based on the variance analysis findings, appropriate corrective or preventive actions can be identified and implemented to bring the project's costs back in line with the cost baseline.
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