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Handbook of Project Management

Handbook of Project Management

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Published by G
Useful book on Project Management and its application, with incisive illustrations and practical examples.
Useful book on Project Management and its application, with incisive illustrations and practical examples.

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Published by: G on Sep 17, 2009
Copyright:Attribution Non-commercial

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05/23/2015

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Cost control status reports can be custom-tailored to suit the preferences of individual managers and to
accommodate specific project differences. However, in general, cost status reports should provide an
item-by-item comparison of actual cost to earned value.9 Estimated cost to complete and projected total cost
can also be shown. Variations from the cost budget can be presented as a percentage or as an actual value, and
categorical breakdowns of the cost status can also be shown. It is often useful to separate material, labor,
equipment, and subcontract costs.

Exhibit 12-3 is an example of a monthly cost control status report. The figures listed as “Total Budget
Amount” represent the originally estimated costs for each of the cost account categories. Actual costs to date
are compared with earned values, and variances are listed. Estimated costs to complete are also given. The
projected total cost has been calculated by adding the actual cost to the estimated cost to complete. This report
could have been expanded to provide a separate listing of material, labor, equipment, and subcontract costs.
The amount of detail can be structured to meet the requirements of the project manager.

Managers will be particularly interested in the variance between actual cost and earned value, and the
resulting total cost projection.

Accuracy and timeliness are equally important in reporting cost control status. If the information is to be of
any value to the project manager, it must be provided soon enough to allow for corrective action. Monthly
cost control reports should be provided as soon as possible after the end of the month. The time lag between
the cutoff of the cost period and production of the report should be as small as possible.

Material suppliers and subcontractors are normally paid monthly; therefore, a monthly cost report seems
appropriate for summarizing these costs. However, labor costs are typically paid on a shorter interval, such as
weekly. Labor costs are also likely to be more variable and consequently are normally the subject of greater
management attention. It may be appropriate to generate weekly status reports of labor costs.

Exhibit 12-3. Monthly cost control status report.

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Graphical representations of the cost-schedule data are often useful in providing a quick visualization of cost
control status. One of the most common is a cost-schedule graph in which actual and budget costs are plotted
against performance time. Exhibit 12-4 is an example of a cost-schedule graph. This example provides a
graphical representation of the data included in the cost control status report given in Exhibit 12-3. In this
example, the project is approximately one week behind schedule in time, and total actual costs have exceeded
the cost budget by 7.1 percent.

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