Project cost control

Detailed (Quotation) estimates, accuracy 5-10 per cent, which are used for project cost control and estimates for fixed price contracts. These are based on the completed (or near complete) process design, firm quotations for equipment, and a detailed breakdown and estimation of the construction cost. 

Finding 10. Prudent management requires early decisions, accurate assumptions, and full consideration of all cost components, regardless of the entity incurring them, and cost estimates that approach the actual final costs. Project cost control procedures and contract incentives were not established as part of the JACADS contract. 

Project cost control procednres and contract incentives should be included in every CDP contract as a proven means of reducing and controlling costs. Indnstry practices have shown that better project performance is achieved when incentives are positive and when they flow down, that is, when they are shared by the prime contractor with snb-contractors, suppliers, and in appropriate cases, individual managers and craftsmen (CII, 1992). 

O.P. Kharbanda E.A. Stallworthy, IChemE, 1985, Effective Project Cost Control ... 

Table B4 Project Cost Control Surfactants Business Unit, Four Monthly Return...

The following tools are required in order to exercise project cost control and provide accurate forecasts ... 

Once the project is under construction, a project cost control system should be implemented. This system provides a status report listing construction status, current budget, committed cost, expenditures to date, cost to be committed, final cost, and variance from budget. This cost system provides management with a method to plan and track the various phases of a packaging project. 

R. Pilcber (Appraisal and Control of Project Costs, McGraw-Hill, Maidenhead, England, 1973, p. 233) stated the main purposes of a cost control system to be ... 

Project Control Having made a good estimate of the capital cost and the expected construc tion time, it is essential to introduce an effective system for controlling expenditure of time and money during construction. Good capital-cost control can cut down expenditures even when the definitive estimate is not veiy accurate. It is most important for management to receive early warnings if overruns in expenditure or time are likely to occur. 

In prac tice, the existence of a tight cost-control system tends to spread a cost consciousness among the personnel involved in the project. Such an awareness, even in construction-equipment maintenance and job housekeeping, can lead to efficient cost control throughout. 

Controls are expensive and quickly become outdated by the increase in technology. They are also the items that are omitted or their quality is reduced if the total project cost becomes excessive. The difference in the quality of the controls against cost can be determined and should be included as part of the project budget or application. 

Traditionally the PERT diagram did not involve costs, but in the early 1960s a plan called PERT/Cost was developed that was similar to the cost-control concepts of CPM. Some authors claimed they were now essentially the same. PERT/Cost involves obtaining one cost for each activity. If the expected time were,the same as the normal time, the procedure for cost control would be the same as for a CPM system. The PERT system can also be easily adapted to the method presented for speeding up projects (crashing). The remarks made previously about scheduling and obtaining time estimates apply equally well to PERT and CPM. 

FINDINGS AND RECOMMENDATIONS Decision Making and Project Planning, 36 Personnel Retention, 37 Acquisition Strategy and Procurement, 37 Cost Control, 37 Monitoring, 37 Security, 38 Safety, 38... 

To facilitate cost control, a total project technical baseline should be established at the earliest possible time from this, a cost and schedule baseline can be developed and maintained throughout the project. 

Detailed Estimate Method For estimates in the detailed category, a code of account needs to be used to prevent oversight of certain significant items in the capital cost. See Table 9-15. Each item in the code is estimated and provides the capital cost estimate then this estimate serves for cost control during the construction phase of a project. 

Modularity. Economic competitiveness requires that the construction time be shortened dramatically. Modular construction techniques arc a key contiibntoi to achieving this goal and are a proven approach to cost control in major construction projects. Modularization provides for a larger percentage of factory construction, rather than field construction. New innovative concepts will rely heavily on modularization and will be centered around lower unit power outputs, factory assembly, and transportation of modules to the plant site. The overall plant size target is 600 MWe net electrical output. 

Pneumatic Controllers The pneumatic controller is an automatic controller that uses variable air pressure as input and output signals. An air supply is also required to power the mechanical components of the controller and provide an air source for the controller output signal. Pneumatic controllers were first available in the early 1940s but are now rarely used for large-scale industrial control projects. Pneumatic controllers are still used where cost, ruggedness, or the installation requires an all-pneumatic solution. 

The control of the costs allocated to each project is the next level of cost control for the R D Manager. Monthly auditing is normally employed by companies, with the derivation of the necessary data easily done if the cost per unit system, described in Section B, 3.1.2.1, is used. It should be based on record of time actually spent on the project not on a notional figure. 

Sometimes the special nature of pharmaceutical manufacturing plant projects clouds the fact that building such a plant is in fact a construction project. The facility engineering team of a small to medium company may be tempted to turn away from such projects due to the projects perceived uniqueness and leave the key decision making to others. In fact, it is the construction experience of that team that is most required to keep the project costs under control. The way to accomplish this is for the team to be involved in the process from its earliest stages. 

When organized efficiently, the cost-control system should require no more paperwork than for the normal construction procedure. The cost of cost control appears to vary between 0.2 and 0.5 percent of the total project value. Proper use of the normal records available for craft-labor time, warehouse-inventory control, and the usual accounting purposes should be adequate. The savings achieved by good cost control should far exceed the additional costs of operating the system. Additional details on the technique are given by H. C. Bauman (Fundamentals of Cost Engineering in the Chemical Industry, Van Nostrand Reinhold, New York, 1964, pp. 190-196). 

The principle of GEP for the BMS system controlling offices, restrooms, and corridors was adopted. The project milestones were then planned and auctioned in accordance with the combined (cGMP/GEP) plan. The suppher was audited and commissioned with the understanding that it must participate in the risk assessments. It was agreed that savings in project costs would be shared however, the company s QA audit group would assess the whole project and fines could be applied if breaches in quality were detected. 

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