Cost Control Operating Cycle: Key Concepts and Metrics in Project Management

Cost Control Operating Cylce

Plan-Collect-Reconcile-Compare-Forecast-Analyze-Act-Report

Confirm scope, WBS/CBS, budget, baseline, schedule, contracts, assumptions and reporting calendar.

Plan

Pull actual costs, commitments, invoices, accruals, labor, vendor data, progress, changes and schedule status.

Collect

Validate that costs are coded correctly, commitments are current, accruals are captured and duplicates/missing items are resolved

Reconcile

Compare actuals and forecast against budget/baseline; compare progress against planned progress

Compare

Re-estimate remaining work (ETC) and calculate/update EAC

Forecast

Find the drivers: productivity, quantities, rates, vendor performance, schedule delay, rework, scope growth, risk realization

Analyze

Discuss mitigation or corrective action with PM, engineering, procurement, construction and operations

Act

Explain current status, trend, forecast, risk, changes and required decisions in a clear management format

Report

the money approved for the project.

Budget

the approved plan used as the measuring stick

Baseline

what you now think the project will actually cost

Forecast

how the work is organized

WBS

how the cost is organized

CBS

the label that connects a transaction to the right bucket

Cost Code

BAC

Budget at Completion

AC

Actual Cost

ETC

Estimate to Complete

EAC

Estimate at Completion

VAC

Variance at Completion

Budget at Completion

The approved total budget

Actual Cost

What was spent/incurred

Estimate to Complete

What will remaining work cost from today forward

Estimate at Completion

What will the final project cost

Variance at Completion

How far above/below BAC is the current final forecast

PV

Planned Value

EV

Earned Value

Actual Cost

What the completed work actually cost

Earned Value

Budgeted value of work actuallyh completed by the status date

Planned Value

Budgeted Value of work that should be complete by the status date

Uncertain future event that may affect cost/schedule.

Risk

Something that has already happened or is happening.

Issue

Action intended to reduce probability and/or impact.

Mitigation

A modification to scope, requirements, quantities, execution basis or commercial terms.

Change

Potential cost movement that may not yet be an approved change but should not be invisible.

Trend/Exposure