Make your own free website on Tripod.com

7.4 Cost Control

Introduction

Cost control is concerned with:
  • influencing the factors which create changes to the cost baseline to ensure that the changes are beneficial
  • determining that the cost baseline has changed
  • managing the actual changes when and as they occur.

Cost control includes:

  • Monitoring cost performance to detect variances from plan.
  • Ensuring that all appropriate changes are recorded accurately in teh cost baseline.
  • Preventing incorrect, inappropriate or unauthorized changes from being included in the baseline.
  • Informing appropriate stakeholders of authorized changes.
  • Searching out "whys" of both positive and negative variances.

7.4.1 Inputs

  1. Cost baseline
  2. Performance reports
  3. Change requests
  4. Cost management plan

7.4.2 Tools & Techniques

  1. Cost change control system
  2. Performance measurement
  3. Additional planning
  4. Computerized tools

7.4.3 Outputs

  1. Revised cost estimates
  2. Budget updates
  3. Corrective action
  4. Estimate at completion
  5. Lessons learned

 

 

 

 

 


7.4.1 Cost Control - Inputs

7.4.1.1 Cost baseline

Refer cost baseline.

 

7.4.1.2 Performance reports

Performance reports provide information on cost performance - which budgets have been met and which have not. Performance reports may also alert the project team to issues which may cause problems in future.

 

7.4.1.3 Change requests

Change requests may occur in many forms and may require increasing or decreasing of project budget. Most change requests are the result of:

 

7.4.1.4 Cost management plan

Refer to cost management plan.

 

Return to Top of Page


7.4.2 Cost Control - Tools and techniques

7.4.2.1 Cost change control system

A cost change control system defines the procedures by which the cost baseline may be changed. It includes the paperwork, tracking systems, and approval levels necessary for authorizing changes. The cost change control system should be integrated with the overall change control system.

 

7.4.2.2 Performance measurement

Performance measurement techniques help to assess the magnitude of any variations which do occur. The important part of cost control is to determine what is causing the variance and to decide if the variance requires corrective action.

 

7.4.2.3 Additional planning

Prospective changes may require new or revised cost estimates or analysis of alternative approaches.

 

7.4.2.4 Computerized tools

Project management software and spreadsheets are often used to track planned costs vs actual costs and to forecast the effects of cost changes.

 

Return to Top of Page


7.4.3 Cost Control - Outputs

7.4.3.1 Revised cost estimates

Revised cost estimates are modifications to the cost information used to manage the project. Appropriate stakeholders must be notified if needed. Revised cost estimates may or may not require adjustments to other aspects of the overall project plan.

 

7.4.3.2 Budget updates

These are a special category of revised cost estimates. Budget updates are changes to an approved cost baseline. These numbers are generally revised only in response to scope changes. In some severe cases "rebaselining" is needed to provide a realistic measure of performance.

 

7.4.3.3 Corrective action

This refers to anything done to bring the expected future project performance in line with the project plan.

 

7.4.3.4 Estimate at completion

An estimate at completion (EAC) is a forecast of total project costs based on project performance. The most common forecasting techniques are some variation of:

 

7.4.3.5 Lessons learned

The causes of variances, the reasoning behind the corrective action chosen, and other types of lessons learned from cost control should be documented so that this information becomes part of the historical database for both this project and other projects of the performing organization.

 

Return to Top of Page