Cost control

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:

. . .
conceptual engineering should be ready. The engineering budget should specify and include sufficient man-hours for economic design alternatives. A carefully planned budget becomes a valuable control tool. The object is to control conceptual engineering man-hours for the most effective study of project alternatives. COST CONTROL DETAILED ENGINEERING The theoretical minimum cost of a project is set during conceptual engineering. The project's theoretical maximum cost is established in the detailed engineering phase. Detailed engineering involves the mechanical design aspects of the project. The end product of detailed engineering is construction drawings specifying all of the details required for project completion. Owners sometimes perform their own detailed engineering, but usually this work is performed by contractors. Caution must be observed in this phase to eliminate overdesign. Frequently items are designed "fat," with an excess of materials. This may happen because of either inexperience or over-conservatism on the part of the designer, or through pressure to meet schedule and man-hour budgets. The cost engineer should always be alert to over-design. During the detailed design phase of a large project, the c
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Approximate Word count = 3354
Approximate Pages = 13 (250 words per page)

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