1、山东建筑大学毕业设计外文文献及译文 1 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 the whole system of project cost control, how it is setup and applied. So we decided to write up a description of how it works
2、. 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, analyze the findings, forecast the end results and compare those with the reference baselines. If the end results are not satisfactory t
3、hen you make adjustments as necessary to the work in progress, and repeat the cycle at suitable intervals. If the end results get really out of line with the baseline plan, you may have to change the plan. More likely, there will be (or have been) scope changes that change the reference baselines wh
4、ich 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 projects that fail to contain costs. It also involves a significant amount of work, as we shall see, and we might a
5、s well start at the beginning. So let us follow the thread of project cost control through the entire project life span. And, while we are at it, we will take the opportunity to point out the proper places for several significant documents. These include the Business Case, the Request for (a capital
6、) Appropriation (for execution), Work Packages and the Work Breakdown Structure, the Project Charter (or Brief), the Project Budget or Cost Plan, Earned Value and the Cost Baseline. All of these contribute to the organizations ability to effectively control project costs. Footnote I am indebted to m
7、y friend Quentin Fleming, the guru of Earned Value, for checking and correcting my work 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 management responsible has a good understanding of h
8、ow projects should unfold through the project life span. This means that they exercise their responsibilities at the key decision points 山东建筑大学毕业设计外文文献及译文 2 between the major phases. They must also recognize the importance of project risk management for identifying and planning to head off at least
9、the most obvious potential risk events. In the projects Concept Phase Every project starts with someone identifying an opportunity or need. That is usually someone of importance or influence, if the project is to proceed, and that person often becomes the projects sponsor. To determine the suitabili
10、ty of the potential project, most organizations call for the preparation of a Business Case and its Order of Magnitude cost to justify the value of the project so that it can be compared with all the other competing projects. This effort is conducted in the Concept Phase of the project and is done a
11、s a part of the organizations management of the entire project portfolio. The cost of the work of preparing the Business Case is usually covered by corporate management overhead, but it may be carried forward as an accounting cost to the eventual project. No doubt because this will provide a tax ben
12、efit to the organization. The problem is, how do 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 and Definition phase. In the projects Development or Definition Phase The objective of
13、 the Development Phase is to establish a good understanding of the work involved to produce the required product, estimate the cost and seek capital funding for the actual execution of the project. In a formalized setting, especially where big projects are involved, this application for funding is o
14、ften referred to as a Request for (a capital) Appropriation (RFA) or Capital Appropriation Request (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 deliverable. From this information, a plan is prepa
15、red in sufficient detail to give adequate confidence in a dollar figure to be included in the request. In a less formalized setting, everyone just tries to muddle through. Work Packages and the WBS 山东建筑大学毕业设计外文文献及译文 3 The Project Management Plan, Project Brief or Project Charter If the deliverable c
16、onsists of a number of different elements, these are identified and assembled into Work Packages (WPs) and presented in the form of a Work Breakdown Structure (WBS). Each WP involves a set of activities, the work that is planned and scheduled as a part of the Project Management Plan. Note, however,
17、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 go ahead. This Project Management Plan, by the way, should become the bible for the execution phase of the project and is sometimes referred to as the
18、 Project Brief or the Project Charter. The cost of doing the various activities is then estimated and these estimated costs are aggregated to determine the estimated cost of the WP. This approach is known as detailed estimating or bottom up estimating. There are other approaches to estimating that w
19、ell come to 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 examine the projects assumptions and environmental conditions to identify any weaknesses in the plan t
20、hus far, and identify those potential risk events that warrant attention for mitigation. This might take the form of specific 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 sufficie
21、nt for a capital request. To arrive at a capital 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 to cover unknowns and possible scope changes. In addition, it may be neces
22、sary to convert the estimating data into a financial accounting format that satisfies the corporate or sponsors format for purposes of comparison with other projects and consequent funding approval. In practice all the data for the type of bottom up approach just described may not be available. In this case alternative estimating approaches are adopted that provide various degrees of reliability in a top down fashion. For example:
