Cost monitoring

Expenditure monitoring is an important component of project control. Not only in itself, but also because it provides an indication of the effort that has gone into (or at least been charged to) a project. A project might be on time but only because more money has been spent on activities than originally budgeted. A cumulative expenditure chart such as that shown in Figure 9.9 provides a simple method of comparing actual and planned expenditure. By itself it is not particularly meaningful - Figure 9.9 could, for example, illustrate a project that is running late or one that is on time but has shown substantial costs savings! We need to take account of the current status of the project activities before attempting to interpret the meaning of recorded expenditure.

Project costs may be monitored by a company's accounting system. By themselves, they provide little information about project status.

Planned cost

Figure 9.9 Tracking cumulative expenditure.

Actual cost

Time (weeks)

Figure 9.9 Tracking cumulative expenditure.

Planned cost

Actual cost

Cost charts become much more useful if we add projected future costs calculated by adding the estimated costs of uncompleted work to the costs already incurred. Where a computer-based planning tool is used, revision of cost schedules is generally provided automatically once actual expenditure has been recorded. Figure 9.10 illustrates the additional information available once the revised cost schedule is included - in this case it is apparent that the project is behind schedule and over budget.

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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