Graduation project 2013 El- ROWAD TOWERS

Chapter 9

Cost Control

Definition:

Cost control is a process that carried out throughout the life of a

project. The life of a project starts from the inception of an idea in the
clients mind to completion of the project. To the contractor who has
constructed the work, it extended to the final payment from the client
(Abdel-Razek 2004).

What is Cost Control?

Cost control management includes a wide range of activities under its

purview. The way I see it, cost control management has three basic
aspects. The first is to find out the cost centers and their variance (if any),
with the industry standards. The second is to find out why we are incurring
more costs than our competitors. And the third aspect deals with ways in
which we can drive our costs to the level at which our competitors are, or
lower.

Cost of the construction work to contractors consists of the following

components:

Labor cost

Equipment cost

Material cost

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S/c cost

Site over heads

Head office over heads

Basic definition

Effective measures:

BCWS:

Budget cost work scheduling = Estimated quantity*Estimated unit

cost

Note: Project budget = budget cost for all activities

ACWP:
Actual cost work performed = Actual unit cost * actual quantities

BCWP:
Budget cost work performed = Estimated unit cost * actual unit cost

Cost variance (CV)

Cost variance = BCWP

as budged

=-

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Cost performance index (CPI)

CPI = BCWP / ACWP >1

<1

Expected final cost = total estimated cost / CPI

Schedule variance (SV)

(SV)= BCWP BCWS

Schedule performance index (SPI)

SPI = BCWP / BCWS >1

<1

Expected final time = original time / SPI

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