# Variance Analysis

> Explain variances between actuals, budget, and forecast with clear operational drivers — not just line-item deltas. Use when preparing management reports, board packs, or performance reviews.

- Skill: `itsual/variance-analysis` (Agent Skill)
- Install (CLI): `npx skillmds@latest add itsual/variance-analysis`
- Raw SKILL.md: https://api.skillmd.com/api/skills/itsual/variance-analysis/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Finance & Business
- Author: itsual (https://skillmd.com/u/itsual)
- Updated: 2026-09-22
- Page: https://skillmd.com/skills/itsual/variance-analysis

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# Variance Analysis

## Overview

Variance analysis turns “what changed” into “why it changed and what we should do.” Good variance work quantifies price, volume, mix, rate, and timing effects.

## When to Use

- Monthly/quarterly performance reviews
- Board and investor reporting
- Flash results and forecast updates
- Cost center accountability conversations

## Core Practices

- Bridge actual vs budget/forecast with waterfall logic
- Decompose into volume, price/rate, mix, and timing
- Distinguish controllable vs external factors
- Tie narratives to operational owners and actions
- Focus on material variances; avoid noise

## Principles

- A number without a driver story is incomplete
- One-time items should be isolated from run-rate
- Forward-looking implication matters as much as history
- Consistency of bridges builds trust over time

## Verification

- [ ] Material variances have driver explanations
- [ ] Bridges are reconcilable to source data
- [ ] Actions or outlook updates follow from the analysis