Variance is a measure of what?

Variance is a statistical measure that quantifies the degree of spread or dispersion of a set of values in a dataset. It assesses how far each number in the set is from the mean (average) and subsequently from every other number. By calculating the variance, you obtain a clear understanding of how much the data points vary from the average, indicating the degree of variability within the dataset.

This concept is essential in various fields, including cost management, as it helps in analyzing project performance and risk by providing insights into cost overrun or underrun dynamics. A high variance indicates that the data points are more spread out, while a low variance suggests that they are closer to the mean. Understanding variance allows cost technicians to manage and predict costs effectively and assess the reliability of financial forecasts.

The other options do not relate to the concept of variance as directly. Average refers to a measure of central tendency, not dispersion. Central tendency describes the center of a distribution but does not provide information on spread. Skewness indicates the asymmetry of a distribution, rather than how dispersed the values are around the mean.