Project Controlling | Cost

The cost of total project scope is estimated and checked. The budget is established once the estimate is approved. The scope is then broken down into work packages and procured. Actual cost is tracked against the budget, deviations highlighted, and the forecast final cost maintained up to date.
Projektsteuerung Kosten und Prozess (PMO)
PMO
Process
Cost

Problem Statement

To deliver the total project scope on time and within budget.

Goals

Ensure that:

  • the total cost of the project scope is accurately estimated,
  • project scope is procured within budget,
  • actual cost linked to progress is tracked, deviations highlighted, and corrective action taken to remain within forecast final cost.

Approach

Once the scope of work is established the following steps are taken:

  1. work is broken down into manageable packages and the cost of each estimated,
  2. individual work package are budgets established, and procurement targets set,
  3. changes, risks and actual costs are controlled,
  4. forecast is maintained up-to-date.

Benefits

By managing the budget at the work package level, the work package managers regularly assess scope, progress, any changes or risks, which provides project services a solid basis for forecasts.

Process Implementation

Teamwork is essential. The teamwork between Project Management and Project Controlling as a part of Project Services is summarised as follows:

Use Case

Christian, the project lead of a new manufacturing facility project had received funding to produce the design. A cost estimate was prepared which formed the basis of the budget. This budget was allocated to work packages.

Procurement of work packages progressed in parallel to design. Any work package procured under budget was celebrated.

As the design developed procurement requests began to appear for scope that Christian thought had already been procured.

We were contracted as Project Controller and began by reconciling the cost estimate with the costs allocated to the work packages. The work package budgets were then adjusted as necessary to give a cost baseline.

We then reconciled the work package scope with the work package budgets and highlighted any deviations.

In some cases, it was clear that the scope of a work package that had been awarded, was not the final scope, often because the design was still developing.

To address this situation, we established a process to manage budget at the work package level which ensures that:

  • work packages were given a growth allowance for scope still to be awarded, changes and risks,
  • progress and forecast final cost were maintained up to date with the direct involvement of the work package managers.

By managing budget at the work package level and working with the work package managers to regularly assess scope, progress, changes or risks solid forecasts of final cost were the result.

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