Cost Control Problems

No matter how good the cost and control system is, problems can occur. Common causes of cost problem include:

• Poor estimating techniques and/or standards, resulting in unrealistic budgets

• Out-of-sequence starting and completion of activities and events

• Inadequate work breakdown structure

• No management policy on reporting and control practices

• Poor work definition at the lower levels of the organization

• Management reducing budgets or bids to be competitive or to eliminate "fat"

• Inadequent formal planning that results in unnoticed, or often uncontrolled, increases in scope of effort

• Poor comparison of actual and planned costs

• Comparison of actual and planned costs at the wrong level of management

• Unforeseen technical problems

• Schedule delays that require overtime or idle time costing

• Material escalation factors that are unrealistic

Cost overruns can occur in any phase of project development. The most common causes for cost overruns are:

• Proposal phase

• Failure to understand customer requirements

• Unrealistic appraisal of in-house capabilities

• Underestimating time requirements

• Planning phase

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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