Task 5 :Project Cost Planning

mONEY...MOneY

                                              

           IMPORTANCE OF COST CONTROL

  v  Cost is one of the project objectives

  v  Unless cost is controlled, project objectives can be jeopardized

  v  Cost, time and quality are interlinked.  Cost control is most critical

  v  Most poorly managed projects have cost overrun

     3W AND 1H IN COST CONTROL 

  v  Who controls cost?

  v  When to control cost?

  v  Where to control cost?

  v  How to control cost?

          COST COLLECTION
              v Labour

        v Material

        v    Cost codes

  

          CALCULATION VARIANCES

                 ü  Schedule Variances (SV)

·         SV = BCWP – BCWS

·         Positive SV means work is ahead of schedule

ü  Cost Variances (CV)

·         CV = BCWP – ACWP

·         Negative CV means overspending

  

          PERFORMANCE INDICES

   ü  Cost performance index (CPI)

·         CPI= BCWP/ACWP

   ü  Schedule Performance Index (SPI)

·         SPI = BCWP/BCWS