Cost control principles

Topics: Measurement, Cost Pages: 33 (672 words) Published: April 14, 2014
3/30/13
 

Cost
 Es+ma+ng
 and
 Control
 
Prof.
 Omar
 El-­‐Anwar
 

 
Lecture
 #7:
 Cost
 Control
 

 

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 prerequisite:
 
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 discussing
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25-­‐Sep-­‐12
 

2
 

1
 

3/30/13
 

Part
 II
 –
 Cost
 Control
 (Project
 
Control)
 

Agenda
 
Ø General
 Introduc+on
 

4
 

2
 

3/30/13
 

Project
 Control
 
•  A
 process
 to
 guarantee
 that
 design
 
requirements,
 budget,
 and
 schedule
 are
 
met
 by
 the
 project
 team.
 
 
•  It
 iden+fies
 devia+on
 early
 and
 allows
 
correc+on
 to
 be
 made.
 
(Gould
 2012)
 

 

5
 

Cost
 Control
 
•  Objec+ves:
 
–  Track
 work
 progress
 and
 expenditures
 
–  Approve
 progress
 payments
 
–  Provide
 forecasts
 and
 trends
 

6
 

3
 

3/30/13
 

Basic
 Control
 Theory
 
• 
• 
• 
• 

Establish
 project
 standards
 
Measure
 actual
 performance
 
Iden+fy
 inconsistencies
 
 
Determine
 causes
 of
 variance
 

7
 

Control
 Baselines
 
•  Cost
 Baseline
 
 
–  Contract
 price
 is
 the
 baseline
 
•  Include
 direct
 and
 indirect
 cost
 items
 

–  Level
 of
 detail:
 Pareto’s
 law:
 
•  80%
 of
 the
 outcome
 is
 determined
 by
 20%
 of
 the
 
elements
 
•  Reports
 present
 selected
 items
 in
 detail
 and
 
others
 at
 summary
 level
 

8
 

4
 

3/30/13
 

Control
 Baselines
 
•  Time
 Baseline
 
–  Level
 of
 detail
 in
 control:
 
•  Less
 in-­‐field
 flexibility
 
•  Higher
 control
 system
 cost
 
•  Needed
 for
 fast-­‐paced
 highly
 technical
 work
 

–  Establish
 control
 points
 
•  Materials
 delivery
 dates
 
•  Subs
 start
 and
 finish
 dates
 

9
 

Measuring
 Actual
 Performance
 
• 
• 
• 
• 
• 
• 

Units
 completed
 or
 percent
 complete
 
Level
 of
 Effort
 
Incremental
 milestones
 
Start/Finish
 
Cost
 ra+o
 
Supervisor
 judgement
 

10
 

5
 
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