Project Office Authorization Signature

*NOTE: SOME COMPANIES DO NOT PERMIT DIVISION COST CENTERS TO CHARGE AT LEVEL 3 OF THE WBS

FIGURE 15-6. Work authorization form.

FIGURE 15-7. Planning and budgeting describe, plan, and schedule the work.

Large companies have computerized cost control and reporting systems. Small companies have manual or partially computerized systems. The major difficulty in using the cost account code breakdown and the work authorization form (Figures 15-5 and 15-6) is related to whether the employees fill out time cards, and frequency with which the time cards are filled out. Project-driven organizations fill out time cards at least once a week, and the cards are inputted to a computerized system. Non-project-driven organizations fill out time cards on a monthly basis, with computerization depending on the size of the company.

Cost data collection and reporting constitute the second phase of the operating cycle of the MCCS. Actual cost (ACWP) and the budgeted cost for work performed (BCWP) for each contract or in-house project are accumulated in detailed cost accounts by cost center and cost element, and reported in accordance with the flow charts shown in Figure 15-9. These detailed elements, for both actual costs incurred and the budgeted cost for work performed, are usually printed out monthly for all levels of the work breakdown structure. In addition, weekly supplemental direct labor reports can be printed showing the actual labor charge incurred, and can be compared to the predicted efforts.

Table 15-1 shows a typical weekly labor report. The first column identifies the WBS number.2 If more than one work order were assigned to this WBS element, then the work order number would appear under the WBS number. This procedure would be repeated for all work orders under the same WBS number. The second column contains the cost centers charging to this WBS element (and possibly work order numbers). Cost Center 41xx represents department 41 and is a rollup of Cost Centers 4110, 4115, and 4118. Cost

2. Only three levels of cost reporting are assumed here. If work packages were used, then the WBS number would identify all five levels of control.

CACN No. Revision to Cost Account No. Date

DESCRIPTION OF CHANGE:

REASON FOR CHANGE:

Requested Budget Authorized Budget

Labor Hours_ _ Period of Performance:

BUDGET SOURCE:

□ Funded Contract Change

□ Management Reserve

□ Undistributed Budget

APPROVALS: Program Mgr.. INITIATED BY: --Prog. Control .

FIGURE 15-8. Cost account change notice (CACN).

Center 4xxx represents the entire division and is a rollup of all 4000-level departments. Cost Center xxxx represents the total for all divisions charging to this WBS element. The weekly labor reports must list all cost centers authorized to charge to this WBS element, whether or not they have incurred any costs over the last reporting period.

Most weekly labor reports provide current month subtotals and previous month totals. Although these also appear on the detailed monthly report, they are included in the weekly report for a quick-and-dirty comparison. Year-to-date totals are usually not on the weekly report unless the users request them for an immediate comparison to the estimate at completion (EAC) and the work order release.

Weekly labor output is a vital tool for members of the program office in that these reports can indicate trends in cost and performance in sufficient time for contingency plans to be established and implemented. If these reports are not available, then cost and labor overruns would not be apparent until the following month when the detailed monthly labor, cost, and materials output was obtained.

FIGURE 15-9. Cost data collection and reporting flowchart.

In Table 15-1, Cost Center 4110 has spent its entire budget. The work appears to be completed on schedule. The responsible program office team may wish to eliminate this cost center's authority to continue charging to this WBS element by issuing a new subdivided work description or work order canceling this department's efforts. Cost Center 4115 appears to be only halfway through. If time is becoming short, then Cost Center 4115 must add resources in order to meet requirements. Cost Center 4443 appears to be heading for an overrun. This could also indicate a management reserve. In this case the responsible program team member feels that the work can be accomplished in fewer hours.

Work order releases are used to authorize certain cost centers to begin charging their time to a specific cost reporting element. Work orders specify hours, not dollars. The hours indicate the "targets" that the program office would like to have the department shoot for. If the program office wished to be more specific and "compel" the departments to live within these hours, then the budgeted cost for work scheduled (BCWS) should be changed to reflect the reduced hours.

Four categories of cost data are normally accumulated:

• Other direct charges

Project managers can maintain reasonable control over labor, material, and other direct charges. Overhead costs, on the other hand, are calculated yearly or monthly and applied retroactively to all applicable programs. Management reserves are often used to counterbalance the effects of adverse changes in overhead rates.

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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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