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Cost control

Cost control is one of the basic responsibilities of project management. Effective cost control allows for projects to be completed on schedule and within the budget so that the owner can realize his expected profits and keep his financial requirements within predetermined limits. Cost control is inextricably linked with the project functions of quality control and schedule control. It is the job of project managers to make sure that equilibrium is achieved between quality, schedule and cost.

The objectives of a typical cost control program are as follows:

1) To identify potential cost problems in time for corrective action to be taken, and to prevent budget overruns before they occur.

To keep each project supervisor advised of the budget for

his particular area of responsibility, and to measure his expenditure performance against the budget.

3) To set up a cost-conscious environment to demonstrate to

workers the effect of their actions on project costs.

4) To minimize project costs by viewing all project activities from a cost reduction point of view.

Cost reporting and cost control are two different entities.

The reporting of actual costs is the job of the project accountant. The job of cost control is to forecast cost trouble spots before the funds are committed and to determine corrective action to minimize these expenditures.

There are five key elements of a good cost control system

for any engineering or construction project. These are:

1) A planned project approach to realize maximum economy.

Timely and accurate cost forecasts that cover the costs

4) Comparison of forecasts to the budget on an item-by-item

5) Positive action to minimize or eliminate budget overruns (Clark & Lorenzoni, 1978, p. 140).

The budget estimate, sometimes called a control estimate, is the main tool of the cost engineer or manager. This estimate gives a detailed prediction of the project plan of ex...

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Cost control. (1969, December 31). In LotsofEssays.com. Retrieved 22:25, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1686761.html