Interim Project Management, Cost Control
Overview
Project cost control is managed by comparing predictions of cost code or cost centre outcomes, with the equivalent budgeted values. Cost codes can be allocated for individual items of expenditure, although it is more normal to group costs into work packages, which correspond to contract or order values.
Cost codes can be conveniently handled within a work breakdown structure (WBS) hierarchy for the project. The WBS defines the relationship of work packages and is a convenient way of accumulating costs in the project, although this approach may not be justified for smaller projects.
The client normally sets the budget allocation for the project, so some initial reallocation / realignment may be needed, with the client's approval, to bring the budgeted costs into line with project cost codes and vice-versa.
For control, committed costs are entered against budgeted values and predicted under and over-runs are calculated for each cost centre. It is essential that a regular review be undertaken for each cost centre - of the cost to complete for each item. This works on the simple premise that it is invariably too late to alter committed costs, but costs to complete can be modified, if potential over-runs are identified in good time.
Costs to complete are usually assessed in consultation with the supplier, or contractor and the budget holder concerned. It is important when assessing out-turn costs, to take impending variation orders and changes into account. In extreme cases of predicted over-run on a cost centre, it is often necessary to bring the cost centre back into line with the budget, by reducing the scope or specification of the work remaining.
Redmayne has expertise and a good track record in the planning and management of industrial facility projects. We can advise your management team on facility expansion or relocation planning and methodology. We can supply experienced interim project management personnel to support the implementation of your facilities programme, if required.
