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Project Cost Control Procedure

Project Cost Control Procedure

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Published by: buddylucena on Jul 03, 2011
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Purpose Overview The purpose of this procedure is to specify the requirements for cost control of CAE projects. Project cost control is a key responsibility of the Project Coordinator during the Development phase of each project and at an overview level for all projects from the Planning phase to Closeout. Project Managers are primarily responsible for cost control of their projects from the Planning phase. Cost control includes: • Establishing a soundly based and well detailed budget initially for the project Business Case (Development phase) and updated for the Project Plan (Planning phase) Processing of project accounts Monitoring cost performance against budget, forecasting, identifying variances and taking corrective action as required Reporting project cost status

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Brief Project Scope Statement Project Process Manual Cost Control Spreadsheet Template? Project Progressing Reporting Procedure Project Scope Management Procedure Project Cost Status Reports


Outputs Procedure # 1

Action Prepare a project cost estimate during the project Development phase for the Business Case. This includes: • Developing a hierarchical Work Breakdown Structure for the project to ‘Account’ level as the basis for estimating and ongoing recording of actuals and forecasts. • Estimating project income. Note that project sponsorship income is net of sponsor payments and the CAE overhead charge to the project.

Responsibility Project Coordinator

DRAFT 1, 20/6/04


typically using a spreadsheet template? to: • Record budget by Account • Record actuals by Account by month • Record work in progress (WIP) being value of work completed but not yet entered as an actual in the accounting system • Maintain and enter current forecast cost by Account. including tracking reasons for forecast changes • Report cost status by Account • Report project expenditure forecast by month • Report summary project cost status as required for input for the CAE Executive Committee Report link to Project Progress Reporting Procedure Administration Manager 3 Project Manager 4 5 6 7 8 Update project cost estimate from Business Case (refer Action #1) during the Planning phase as input to the Project Plan.# Action • Gathering expenditure estimate information by Account (mostly hours per task and rates for people engaged on the project plus their expenses) and developing expenditure estimate accordingly • Preparing proposed project budget based upon the estimate. 20/6/04 9 . DRAFT 1. Setup a cost control system for the project based on the WBS. Receive invoices for project services from suppliers. Project Manager Project Manager Executive Director Administration Manager Provide monthly ‘Transaction Analysis Reports’ (TAR) from the Administration accounting system itemizing all project actuals to each Project Manager Manager as at the end of each month by the 3rd? working day of the following month Project Manager 2 Monitor project cost variances on an ongoing basis and advise the CAE Executive of any substantial new variances of forecast cost by the 2nd working day of each month. Note this includes allocating a 5 character ‘Activity Centre’ number in the accounting system as the project identifier. Manage accounts payable and receivable for all projects including preparation. verify and recommend to CAE Executive Director for payment. Review and approve invoices for payment. sending and follow up of CAE invoices. Responsibility 2 When the Business Case is approved setup the project in the CAE accounting system so that financial transactions can be processed and cost reports prepared for the project.

WIP and forecasts by Account on a monthly cycle when the TAR is received (i. Programme Managers and Executive Director and take action as necessary. TAR provides the actuals transaction detail) using the project cost control system (refer Action #3). Project Plan budget and final actual cost by Account plus commentary on variances by Account with lessons learned for possible application to future projects. 20/6/04 3 . Monitor and evaluate cost performance against budget. When project is complete ensure that all outstanding financial transactions have been processed and arrange for project closure in the accounting system.# Action the CAE Executive of any substantial new variances of forecast cost by the 2nd working day of each month. Review reports with Project Champions. This includes tabulated Business Case budget. identify variances and take corrective action as required Report updated month end project cost status to the Project Coordinator by the 5th working day of the following month. It is noted that the September project cost forecasts are particularly important for CAE due to the annual budget cycle. Review and update actuals. Prepare final project cost status report for inclusion in the Project Closeout report. This includes incorporating any approved scope changes into the budget and forecast in accordance with the Scope Management Procedure link to scope management procedure. Responsibility Manager Project Manager 10 11 Project Manager 12 Project Coordinator 13 Administration Manager Project Manager/ Coordinator 14 DRAFT 1. review submitted reports and follow up with Project Managers as necessary to ensure acceptable quality of information. Expedite submission of monthly cost status reports from Project Managers.e.

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