CIPS Introducing Procurement and Supply (L2M1) Practice Exam – Prep & Study Guide

The factor that can lead to variances in budgets is price increases. When the cost of goods, services, or materials rises unexpectedly, it directly impacts the overall budget allocated for those expenses. For instance, if a key supplier raises prices or if inflation affects purchasing costs, the budgeted amounts become insufficient to cover the actual expenses. This scenario necessitates adjustments to the budget to align with the new cost realities.

Forecasting, while it does play a role in budget planning, is about predicting future expenses and revenues based on available data and trends. If forecasting is not accurate, it can lead to variances, but it is an indirect cause. Team performance can also influence project outcomes and budgets, but again, this is more related to execution rather than direct budget variance caused by external factors such as pricing changes.

Thus, while price increases are a clear and direct cause of budget variances, the other mentioned factors might not consistently lead to such changes in a straightforward manner.