Cost Control Information Systems Need To Be Monitored
written by: Jayant R Row
• edited by: Michele McDonough
• updated: 1/25/2011
Cost control and cost information systems need to be set up by every project manager for effectively controlling a project. Setting up such systems can involve a lot of paperwork, but all such paperwork is meaningless if it does not give guidance on the control actions to be taken to rein in costs.
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Elements of a Cost Control System
In any cost control system, one first needs to set up data based on observations made with respects to costs incurred on a project. These observations have to then be compared to some standards that have been set up by the owners of the project or other organizational or business standards. Once these comparisons are made, the project manager has to decide on areas that require corrective action. Project cost control software can help to make such comparisons.
Any good cost control system should allow a project manager to compare the present cost levels with the planned costs or other standards that are being applied to the project. He should then take the necessary action to keep these costs within the required limits. The project manager also needs to find out the reasons for any cost overruns, and whether the corrective actions suggested are likely to prevent recurrence of such increased costs. Most cost figures are available much after the events have occurred, and the project manager needs to therefore find other means to predict future costs and their effect on the cost control desired for the project.
A number of software applications are available which can ease the burden of cost control and guidance on corrective action. Most of this software is free to use for limited periods and can be purchased if the use proves beneficial.
Project Budget Manager 3.1
This is a cost control program that can be even used for very small projects. The software is kinder to engineers and emphasizes the control aspect rather than the accounting part. It maintains all income and expenditure data in one database and then compares them with budgeted and forecast expenditures.
Job Cost Controller for Excel 3.01
This software uses Excel spreadsheets to keep track of all cost tracking. The format is suitable for contractors and engineers and all other technical people. It tracks the construction costs and ties it up to estimates and other parameters that can be set up by the user. Variances are reported for both over budget and under budget items. The project manager or owner will be able to see costs for each period and also assess profit and loss where such parameters are important.
Project Risk Analysis 2.0
This is software that can help project managers assess the risks on capital intensive projects. It uses a number of stimulation models that are accepted to monitor the costs and judge them with respect to the risk involved.
SW Cost Estimation
This is mainly oriented towards cost control on software projects and has a number of models which can be used to monitor a project. This can also estimate likely costs based on pay structure and personnel being used for the project. The models would suggest the likely manpower requirement and thus arrive at figures for the cost of the project based on present costs being incurred.