Government subcontractors are required to have a government-approved cost/schedule control system. The information requirements that must be demonstrated by such a system include:

• Budgeted cost for work scheduled (BCWS)

• Budgeted cost for work performed (BCWP)

• Actual cost for work performed (ACWP)

• Estimated cost at completion

• Budgeted cost at completion

• Cost and schedule variances/explanations

• Traceability

The last two items imply that standardized policies and procedures should exist for reporting and controlling variances.

FIGURE 15-13. Integrated cost/schedule system.

When permitted variances are exceeded, cost account variance analysis reports, as shown in Figure 15-14, are required. Required signatures may include:

• The functional employees responsible for the work

• The functional managers responsible for the work

• The cost accountant and/or the assistant project manager for cost control

• The project manager, work breakdown structure element manager, or someone with signature authority from the project office

For variance analysis, the goal of the cost account manager (whether project officer or functional employee) is to take action that will correct the problem within the original budget or justify a new estimate.

Five questions must be addressed during variance analysis:

• What is the problem causing the variance?

• What is the impact on time, cost, and performance?

• What is the impact on other efforts, if any?

• What corrective action is planned or under way?

• What are the expected results of the corrective action?

One of the key parameters used in variance analysis is the "earned value" concept, which is the same as BCWP. Earned value is a forecasting variable used to predict whether


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.

Get My Free Ebook

Post a comment