Cost control principles

3/30/13

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

Lecture #7: Cost Control

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25-­‐Sep-­‐12

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3/30/13

Part II – Cost Control (Project Control)

Agenda Ø General Introduc+on

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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)

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

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Basic Control Theory •
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Establish project standards Measure actual performance Iden+fy inconsistencies

Determine causes of variance

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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

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