A variance should represent a surprise and unexpected event that we could not predict.
In any case, if you have multiple and large variances, that should send up a flag that something is wrong, or at least alert you to review your processes. And we’re not just going to “answer and run” on this one – if suspect something is wrong and need help tracking down root causes and cleaning up processes we are all too happy to help! One of the key indicators of an internal process issues is the number and total dollar value of your variance purchase orders. If you are building your homes on variance purchase orders, you cannot project true margins until well after you close the home. This is dangerous water for any builder.