Cost Control includes monitoring cost performance, ensuring that only appropriate project changes are included in a revised cost baseline, and informing project stakeholders of authorized changes to the project that will affect cost.
Cost Control purpose is to identify performance issues regarding cost in order to signal action to adjust the cost baseline or budget. It is also used to signal the project manager to take corrective action.
Cost control is designed to control change, not prohibit change.
Effectiveness in controlling project costs is based on using a number of disciplines and practices. Some of these are almost intuitive.
For example, what personal disciplines do you invoke in managing your household expenses? Do you establish a budget? What techniques do you employ to monitor your budget?
Purpose of Cost Control
The primary purpose of the Cost Control process is to influence the factors that create cost variances and to control changes to the project budget.
One of the most common problems in project management is overrunning the project budget. There are a number of plausible explanations for this. People may be more focused on the technology and making sure that the project requirements are met, literally at the expense of the budget. In other situations, the need to define and observe a budget constraint is not recognized; therefore cost performance is running "open loop," until the sponsor or customer calls attention to the problem.
Project Cost Control includes:
- Influencing the factors that create changes to the cost baseline;
- Ensuring that requested changes are agreed upon;
- Managing the actual changes when they occur;
- Assuring that potential cost overruns do not exceed the authorized funding for a particular phase and the total funding for the project;
- Monitoring cost performance to detect and understand variances from the cost baseline
- Recording all appropriate changes accurately against the cost baseline;
- Preventing incorrect, inappropriate, or unapproved changes from being included in the reported cost or resource usage;
- Informing appropriate stakeholders of approved changes; and
- Acting to bring expected cost overruns within acceptable limits.