Amacom - Modern Project Management (Ocr) - 2001 ! - (By Laxxuss)

Progress measurement 3 variance tracking and change

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Unformatted text preview: ubdivided project management into project planning and project execution . We essentially covered project planning in Chapter 2. It will take us three more chapters to cover the core issues of project execution. For most readers who can envision themselves as project managers, whether or not they are one yet, the interesting part will not come until Chapters 4 and 5. This is where we consider how project managers use this information to make decisions, what kind of decisions are made, and what impact these decisions have on projects. But, before we can do this, we need to understand what information needs to be collected to allow us to make our decisions. Recall that project execution consists of the following five parts: 1. Cost accounting 2. Progress measurement 3. Variance tracking and change control Page 68 4. Performance evaluation 5. Productivity measurement In this chapter we cover the first three of these functions. To conduct these functions, there are three classes of information that need to be collected on a regular basis. These are 1. Actual expenditure information 2. Progress information 3. Variance information We explain these classes of information in this chapter and how they can be entered into the project database using the Modern Project tools. We then explain (in Chapters 4 and 5) how the Modern Project tools can be employed to get vital project performance and productivity measures and trends that will enable the successful control of the project. 3.1— Collecting Actual Expenditures Project management is responsible for gathering actual expenditure data. Effective project control is based on documentation of all expenditures of resources (labor-hours, materials, equipment, and costs) by work package. All expenditure data are gathered and preserved as the project is executed, developing a record of expenditures that can be compared with the project baseline. In many project-oriented industry segments, this project management function is called cost accounting . It differs from general accounting in that the principal objective is to collect costs (expenditures) by WBS codes and other meaningful cost collection codes, rather than by general ledger codes. In the example project discussed in Chapter 2, the reader will recall that the cost codes that were used within a work package were the general ledger codes themselves, but they can be any set of cost codes that is meaningful for a project organiza - Page 69 tion. In many large corporations, the general ledger codes become quite complex in their reflection of the uses to which they are put for tax reporting and other regulatory compliance. This tends to make them unsuitable for cost accounting. Cost accounting provides a basis for collecting actual expenditures for a number of other reasons, such as establishing historical records of the percentages of resources projects tend to expend on various classes of activities. Cost accounting is also used to monitor whether the rate of expenditure on a particular project is in accordance with the project baseline. For simplicity, we will continue assuming that the cost codes are the same as the general l...
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This note was uploaded on 01/11/2011 for the course ACC 9 taught by Professor Yeetan during the Spring '10 term at Sunway University College.

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