Cost Control in Project Planning

Capture overruns and identify variances

The periodic budget review process is at the center of establishing up-to-date reliable project performance projections. Early detection is key to effective project cost control. Using the cost breakdown structure, you can break down the budget into smaller buckets to isolate, automatically capture overruns, and pick up on variances. By periodically evaluating Cost to Complete (CTC) and Estimate at Completion (EAC), controllers can predict and record variances before they materialize and in time to take corrective action.

The budget review process also computes updated expectations to project margins and productivity ratios against project deliverables. Project costing is period specific, and a full history of past periods is stored for future reference and trend analysis

Determine accrued revenue

Once the project controller is done with the CTC and EAC, there’s an updated variance and EAC completion. EAC completion is the actual costs out of EAC. Projects configured with completed percentage revenue recognition can base accrued revenue on EAC completion as defined in the costing sheet.

EAC is typically used for revenue recognition. At the end of the month, there’s a lot of cost on the project. Essentially by looking at the overall contract for the project and the EAC completion, controllers can figure out how much revenue they can accrue.

Easily see how project costs trend over time

Project Cost Control provides an audit trail of how costs trend over time. The costing sheet can display the project S-Curve, earned value analysis, budget and performance trends over time. Viewing a complete history of past budget periods allows for more effective and productive business processes in the future.