Project Controls Firm: Cost You See Control You Must
I was never a big fan of Star Wars, but I knew the characters pretty well. Yoda was always my favorite because of his wisdom.
The wisdom in this meme is there are always project costs. Some people see the costs some may not, but there is a cost to everything in a project. In my opinion cost control is THE most important discipline in Project Controls and Project Management. I am not knocking Risk Management, Schedule Management, Contracts Management, Document Controls or any other discipline. AND yes, cost control is more important than engineering (I know those are fighting words)….
Consider this every project that is executed is done to create monetary value. If there is no monetary value, then a project will not be executed. I will go so far as to say all disciplines revolve around cost accounting.
Since everything revolves around cost then it must be controlled. So ultimately the question is how to do you control cost?
Great cost control has to have a great schedule so that a project can time phase the project costs correctly. In addition to time phasing; when the schedule moves to the right or to the left then the forecast should adjust accordingly. There are a lot more mechanics that goes into alignment of cost and schedule, but for the purposes of this post/article the takeaway is the ETC, ETC or budget must be adjusted based on the schedule.
Great cost control has to have great risk management techniques. Risk will adjust contingencies to your costs. There are many ways to add risk management costs into your budget. You can add cost from your Monte Carlo simulation either above the line, below the line or as a loaded number at the line item level. Each method has its pros and cons so your organization must decide which is better for your projects. *Shameless plug* (At PE4U we can assist in identifying which is the best method for your organization).
Document controls is just as important when it comes to cost control. Document control is especially important to change order management. Emails, quotes, invoices etc. is important to ensuring everyone is on the same page months or years down the road. These documents will be important if there are any disputes in your project.
There are more elements to controlling costs feel free to contact us for a free consultation to discuss your needs but in the meantime…
Cost you see; control you must.