Zephyr Professional Practice Test 2025 - Free Practice Questions and Study Guide

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What is a budget variance?

The budget allocated for potential project risks

The difference between the planned budget and the actual expenditure on a project

A budget variance is defined as the difference between what was originally planned in the budget and what was actually spent during the course of a project. This difference is crucial for project management as it indicates how well the project is adhering to its financial plan. A positive variance indicates that spending was less than anticipated (a surplus), while a negative variance shows that costs exceeded the budget (a deficit). Understanding budget variances is important for making informed financial decisions and adjustments during the project lifecycle, ensuring that projects remain on track financially.

The other options refer to different financial terms or aspects of project management. The allocation for potential project risks, contingencies, and surpluses from previous projects do play important roles in the financial health of a project but do not define what a budget variance is.

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The amount of money set aside for project contingencies

The surplus budget from previous projects

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