外文文献：
Project Cost Control: The Way it Works
By R. Max Wideman
In a recent consulting assignment we realized that there was some lack of understanding of thewholesystem of project cost control, how it is setup and applied. So we decided to write up adescription ofhow it works. Project cost control is not that difficult to follow in theory.
First you establish a set of reference baselines. Then, as work progresses, you monitor the work, analyzethe findings, forecast the end results and compare those with the reference baselines. If the end resultsare not satisfactory then you make adjustments as necessary to the work in progress, and repeat the cycleat suitable intervals. If the end results get really out of line with the baseline plan, you may have tochange the plan. More likely, there will be (or have been) scope changes that change the referencebaselines which means that every time that happens you have to change the baseline plan anyway.
But project cost control is a lot more difficult to do in practice, as is evidenced by the number of projectsthat fail to contain costs. It also involves a significant amount of work, as we shall see, and we might aswell start at the beginning. So let us follow the thread of project cost control through the entire projectlife span.
And, while we are at it, we will take the opportunity to point out the proper places for several significantdocuments. These include the Business Case, the Request for (a capital) Appropriation (for execution),Work Packages and the Work Breakdown Structure, the Project Charter (or Brief), the Project Budget orCost Plan, Earned Value and the Cost Baseline. All of these contribute to the organization's ability toeffectively control project costs. Footnote
I am indebted to my friend Quentin Fleming, the guru of Earned Value, for checking and correcting mywork on this topic.
The Business Case and Application for (execution) Funding
It is important to note that project cost control is most effective when the executive managementresponsible has a good understanding of how projects should unfold through the project life span. Thismeans that they exercise their responsibilities at the key decision points
1
between the major phases. Theymust also recognize the importance of project risk management for identifying and planning to head offat least the most obvious potential risk events. In the project's Concept Phase
? Every project starts with someone identifying an opportunity or need. That is usually someone ofimportance or influence, if the project is to proceed, and that person often becomes the project'ssponsor.
? To determine the suitability of the potential project, most organizations call for the preparation ofa \can be compared with all the other competing projects. This effort is conducted in the ConceptPhase of the project and is done as a part of the organization's management of the entire projectportfolio.
? The cost of the work of preparing the Business Case is usually covered by corporatemanagement overhead, but it may be carried forward as an accounting cost to the eventualproject. No doubt because this will provide a tax benefit to the organization. The problem is, howdo you then account for all the projects that are not so carried forward?
? If the Business case has sufficient merit, approval will be given to proceed to a Development andDefinition phase.
In the project's Development or Definition Phase
? The objective of the Development Phase is to establish a good understanding of the workinvolved to produce the required product, estimate the cost and seek capital funding for theactual execution of the project.
? In a formalized setting, especially where big projects are involved, this application for funding isoften referred to as a Request for (a capital) Appropriation (RFA) or Capital AppropriationRequest (CAR).
? This requires the collection of more detailed requirements and data to establish what work needs to be done to produce the required product or \From this information, a plan isprepared in sufficient detail to give adequate confidence in a dollar figure to be included in therequest.
? In a less formalized setting, everyone just tries to muddle through. Work Packages and the WBS
2
The Project Management Plan, Project Brief or Project Charter
? If the deliverable consists of a number of different elements, these are identified and assembledinto Work Packages (WPs) and presented in the form of a Work Breakdown Structure (WBS).
? Each WP involves a set of activities, the \that is planned and scheduled as a part of theProject Management Plan. Note, however, that the planning will still be at a relatively high level,
and more detailed planning will be necessary during execution if the project is given the goahead. ? This Project Management Plan, by the way, should become the \ofthe project and is sometimes referred to as the \? The cost of doing the various activities is then estimated and these estimated costs are aggregatedto determine the estimated cost of the WP. This approach is known as \estimating\in a minute.Either way, the result is an estimated cost of the total work of the project.
Note: that project risk management planning is an important part of this exercise. This should examinethe project's assumptions and environmental conditions to identify any weaknesses in the plan thus far,and identify those potential risk events that warrant attention for mitigation. This might take the form ofspecific contingency planning, and/or the setting aside of prudent funding reserves.
Request for capital Converting the estimate
? However, an estimate of the work alone is not sufficient for a capital request. To arrive at acapital request some conversion is necessary, for example, by adding prudent allowances such as
overheads, a contingency allowance to cover normal project risks and management reserves tocover unknowns and possible scope changes.
? In addition, it may be necessary to convert the estimating data into a financial accounting format that satisfies the corporate or sponsor's format for purposes of comparison with other projectsand consequent funding approval.
? In practice all the data for the type of \
3
In this case alternative estimating approaches are adopted that provide various degrees ofreliability in a \
Order of Magnitude estimate – a \only
Analogous estimate – an estimate based on previous similar projects
Parametric estimate – an estimate based on statistical relationships in historical data ? Whichever approach is adopted, hopefully the sum thus arrived at will be approved in full andproves to be satisfactory! This is the trigger to start the Execution Phase of the project Note: Some managements will approve some lesser sum in the mistaken belief that this will helpeveryone to \This is amistaken belief because management has failed to understand the nature of uncertainty and risk inproject work. Consequently, the effect is more likely to result in \an adverse effecton product quality, or reduced product scope or functionality.This often leads to a \be fair, management is also well aware that if money is over allocated, it will getspent anyway. The smart thing for managements to do is to set aside contingent reserve funds, varyingwith the riskiness of the project, and keep that money under careful control. Ownership of approved capital
? If senior management approves the RFA as presented, the sum in question becomes theresponsibility of the designated project sponsor. However, if the approved capital requestincludes allowances such as a \to theproject's sponsor, depending on the policies of the organization.
? For the approved RFA, the project sponsor will, in turn, further delegate expenditure authority tothe project's project manager and will likely not include any of the allowances. An exceptionmight be the contingency allowances to cover the normal variations in work performance.
? The net sum thus arrived at constitutes the project manager's Approved Project Budget. Note: If management does not approve the RFA, you should not consider this a project failure. Eitherthe goals, objectives, justification and planning need rethinking to increase the value of the project'sdeliverables, or senior management simply has higher priorities elsewhere for the
4
available resourcesand funding. The Project's Execution Phase
The project manager's Project Budget responsibility
? Once this Approved Project Budget is released to the project manager, a reverse process musttake place to convert it into a working control document. That is, the money available must bedivided amongst the various WBS WPs that, by the way, have probably by now been upgraded!This results in a project execution Control Budget or Project Baseline Budget, or simply, theProject Budget. In some areas of project management application it is referred to as a ProjectCost Plan.
? On a large project where different corporate production divisions are involved, there may be afurther intermediate step of creating \Accounts\for the separate divisions, so that eachdivision subdivides their allocated money into their own WBS WPs.
? Observe that, since the total Project Budget received formal approval from ExecutiveManagement, you, as project manager, must likewise seek and obtain from ExecutiveManagement, via the project's sponsor, formal approval for any changes to the total projectbudget. Often this is only justified and accepted on the basis of a requested Product ScopeChange.
? In such a case the project's sponsor will either draw down on the management reserve in his orher possession, or submit a supplementary RFA to upper management.
? Now that we have the Project Budget money allocated to Work Packages we can furtherdistribute it amongst the various activities of each WP so that we know how much money wehave as a \
? This provides us with the base of reference for the cost control function. Of course, depending onthe circumstances the same thing may be done at the WP level but the ability to control is then ata higher and coarser level. Use of the Earned Value technique
? If we have the necessary details another control tool that we can adopt for monitoring ongoingwork is the \you mustlearn about from texts dedicated to the subject.
? But essentially, you take the costs of the schedule activities and plot them as a cumulative
5
工程造价专业外文文献翻译(中英文对照94645
