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Project Cost Monitoring & Control

Project Cost Monitoring & Control - PROJECT COST...

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PROJECT COST MONITORING & CONTROL Project Monitoring & Control Process Once the project scope is agreed upon in terms of clearly defined deliverables, the schedule is finalized at its optimum level, and the budgets sanctioned, the project is taken-up for execution. It is the responsibility of the project manager during the project execution phase to keep these three parameters under control till completion. Project success is measured as the ability to complete the project; According to desired specifications Within the specified budget Within the promised time schedule While keeping the customer and stakeholders happy . Therefore, these parameters act as a baseline or a benchmark against which the progress is compared from time to time during the project execution. Project monitoring and control process therefore becomes one of the key processes of project management. Project Monitoring Project monitoring is to establish progress made against the plan. A review of the current status is taken periodically and a status report is prepared about the current position of the project on the date of review. Project Control Project control is taking corrective action to reduce difference between plan & reality, to achieve a balance between Cost, Time & Performance parameters of the project. Although project monitoring can be carried as an independent function having no direct responsibility for project execution, the project control and taking action is based on responsibility, authority & power. Project control is deciding the action plan among various alternatives that appears strategically the most suitable under the given situation. Project Monitoring & Control Cycle The project monitoring and control cycle illustrated in the diagram below is repeated periodically at a regular interval till completion of the project. The revised plan (R1) that replaces the Base Plan at the first review gets further replaced by the second revision (R2) subsequently and so on. BASE PLAN Schedule Budget Scope ANALYSE EFFECT On Schedule, Budget & Scope On Schedule, Budget & Scope MANAGERIAL ASSESSMENT OF ALTERNATIVES DECIDE ACTION PLAN STATUS STATUS Schedule Budget Scope CHANGE  REQUESTS Schedule Budget Budget Scope Scope OBSERVED  OBSERVED  DEVIATIONS DEVIATIONS Schedule Schedule Budget Budget Scope Scope REVISED PLAN Schedule Budget Scope COMPARE Replace Base plan
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The basic principle of control is that the control can be exercised only while the activity is under progress, when a likely deviation from any of the specified parameters is noticed. Therefore, the control action should be always proactive. Once the activity gets completed, any corrective action becomes a reactive control where ‘rework’ is scheduled at an extra cost and time.
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