Service Cost Variance
Category: Strategic
Measures the difference between the actual cost of providing services and the budgeted cost.
What it Measures ?
Difference between planned and actual service costs.
Relevant StakeHolders
Finance, Project Managers
Why it Matters ?
Monitors and reduces unexpected service costs.
In-depth Use Case / Real-world Example
Service Cost Variance is calculated by subtracting the actual service costs from the budgeted costs. For example, if the budget for service delivery is ₹10 lakhs but the actual cost is ₹12 lakhs, the variance is ₹2 lakhs. This KPI helps track cost control and operational efficiency in service operations. A high service cost variance may indicate inefficiencies or the need for better cost management practices.
Sample Formula
(Budgeted Service Cost - Actual Service Cost) / Budgeted Service Cost