Wednesday, March 13, 2019
Procedure Cost Control
mental process for comprise Control Table of Contents 1. Purpose 2. General 3. Responsibilities 4. Procedure 5. flowchart 6. References 7. Attachments 1. PurposeTo establish a body whereby ontogenesiss which affect the apostrophizes of the suffer atomic number 18 timely dealed, thereby digesting for corrective follow up when adverse tr terminals ar detected, and to tell astir(predicate) funding requirements for the writ of proceeding of the run into. To establish a affair to suppress flow of training which affects judge die hard(a) purpose monetary value.This procedure shall be used in combination with the Procedure for honk Variations 1, the Planning Procedure 2 and the Procedure for the confinement exe boot oution Control system 3. 2. GeneralAt cipher turn out, broadly a high train work out is forthcoming and in numerous cases underlaying particulars about visualised hails are in like manner available. These documents, however, are in most ca ses not suitable for effective terms withstand. Therefore, this procedure requires that in an early stage of the envision a image work out is build upd, establish on the available study and at bottom the boundaries of the high take (AS SOLD) reckon. toll accountant within caller commandly consists of the next categories- Comp both Services (reimbursable applied scientisting science, procurance , Construction Management and outside go) also lymph node greet coverage. The enthronization comprise key outing which involves all approachs within the mount of the bulge out (e. g. direct supplied materials, sub call fors, services including Comp any(prenominal)s services etc. ). state internal equal report which is limited to Companys services, including non reimbursable be. The requirement for the stolon two categories largely depends on the scope of imprint for the stray and the contract type.Regardless of the scope of work and the contract type, in ternal woo reporting will always be indigenceful. The represent reports shall as a minimum contain the avocation data- pilot light calculate. legitimate compute, being the sum of the original figure and the pass agitate rules. Commitments to date. Anticipated lowest, being the sum of the current budget, pending dislodge orders and esteemd leavings from plan. authorize shift notices which admit not yet been converted into neuter orders are excluded from the judge final.They are reported in a transplant Order Register, which is part of the follow report. Cost indicates shall be make on a regular basis through sampling, trend analysis and bottoms up estimates to pad. divergences from plan shall be made where follow forecasts at speak to report birth spot level deviate from the current evaluate final. 2. 1 Company Services2. 1. 1 The Company services monetary value report includes manhours and be of manhours, computer application, reproduction, commun ication, travel, outside services etc. The social organisation of the report has to be defined at the start of the exteriorise.Requirements for reporting in the clients code of account and grouping by clients work packages have to be carefully examined to determine the level of head at which the costs are accountantled. 2. 1. 2 In general the level at which costs are constraintled should be of adequate detail to result for integrating in both Companys project cost codes and the combination of client defined work packages and code of accounts. The selected level of detail must forfeit for true age reporting in combination with reporting of the expended manhours as required for trend analysis.Too much detail generally results in reduced tone of voice and is a waste of effort. 2. 1. 3 An end of project partition should be considered when the client requires to know the project cost in more detail than the level at which effective cost control is done. 2. 1. 4 To easiness time phased budgeting and forecasting at discipline level, the cost control system should follow the work breakdown structure of the provision and project execution Control (PEC) system. 2. 1. 5 Based on the available teaching (budget, draw close, actuals, enumeration etc. , the cost plan makes a forecast on final manhours and costs and rounds this forecast with the parties involved. For line particular propositions where the forecast deviates from the expect final a deviation of Plan is prepared. Only deviations approve by the project director are included in the cost report. 2. 2 investment Cost2. 2. 1 The Investment cost Report includes costs of Companys services at a consolidated level, direct supplied materials, speculates and any separate costs which fall within the cost control scope. The structure of the report has to be defined at the start of the project.Requirements for reporting in the clients code of account and grouping by clients work packages have to be c arefully examined to determine the level of detail at which the cost details are chief(prenominal)tained. 2. 2. 2 In general, the level at which the cost details are maintained should be of sufficient detail, to allow for integrating in both Companys cost codes and the combination of client defined work packages and code of accounts. The selected level of detail must allow rea careenic allocation of commitments and development of forecasted finals.Too much detail generally results in reduced quality and is a waste of effort. 2. 2. 3 An asset breakdown at the end of the project should be considered when the client requires to know the project cost in more detail, than the level at which effective cost control is done. 2. 2. 4 To ease the development of commitment expenditure curves, the enthronement cost control system and the planning system are quite integrated to the extend that scheduled and actual dates for commitments can be obtained from the planning system at budget line item level.Therefore, the investment cost control structure should largely follow the work breakdown structure of the planning and project execution control (PEC) system. 2. 2. 5 The design development allowances (DDA) for outstanding commitments are to be reviewed periodically and shall be reduced oer time when it becomes more certain that there are no set ahead developments expected (e. g. vendor documents approved, inspection reports received etc. ). Grouping DDA for budget line items of the same account group into one DDA line item for that group, rather than including a DDA for each line item, is recommended.The cost report should demo the value of the DDA or a back up report should be available. 2. 2. 6 For main equipment and for bulk materials the cost code is at least(prenominal) at requisition level. For subcontracts, the cost code is for small subcontracts at subcontract level and for larger subcontracts (e. g. mechanical subcontract) the cost code is at main category (pay item) level. 2. 3 Internal Cost Report2. 3. 1 The internal cost report shall be limited to Companys scope of work and will include for reimbursable type contracts the non reimbursable costs.The level of detail for the internal cost report shall be established at project start, taking internal reporting requirements, such as the current cost outlook (CCO), the monthly project situation report (MPSR) and executive summary report (ESR), into account. 2. 4 Cost addressing Scope Document2. 4. 1 At job start the cost devise issues the cost design science scope which contains at a minimum the following information * Scope of work to be covered by the project cost place. * Cost design deliverables, together with their frequency and timing. Report layouts and level of detail. * Project reporting period cut off dates. * Cost prepareing staffing plan and cost orchestrateing manhours. * Computer programs and methods to be used. * Anticipated troth of estimating for the preparati on of bottoms up estimates to utter(a) and for the development of the control budget. * Planned dates for the first issue of the control budgets. * Distribution schedules. * Currency ex motley judge and reporting funds. 3. Responsibilities3. Each project team member shall immediately respond when their stimulant drug is required for reporting physical progress and to determine the anticipated finals as required for the cost report preparation and shall work towards minimizing the duration for execution of this procedure. 3. 2 The Project Manager is Responsible for- Providing the cost conduct with information about the cost engineering scope of work, specific client and project requirements, AS SOLD budget and any underlaying estimate details and any other information required by the cost engineer to prepare the cost engineering scope document and the control budget(s). Approving the cost engineering scope, control budget(s), deviation from plans and cost reports(s). 3. 3 Lead specify Engineers are Responsible for- Updating of material quantity forecasts after linchpin engineering documents have been issued and for timely reporting of falsifys, in writing (change alert), to the project manager. Providing monthly updates on the physical progress of their discipline(s) and to review together with the project cost Engineer the manhour forecast. 3. 4 The Cost Engineer is Responsible for- Maintaining the cost control system and for the timely preparation of the tip cost Reports. Expediting the Lead Discipline Engineers to ensure that they provide their timely commentary as required for cost control. Comparison of vendor and subcontractor quotations with the control budget and underlaying detailed estimate and for detection of unit rate trends based on quotation and corrupt order/subcontract unit rates. turnment and tutelage of planned and actual commitment versus expenditure reports from which the planned and actual cost Progress Curves are generated . . 5 The project buyer/subcontract engineer is answerable for timely input to the cost engineer of vendor quotations and buy order/ subcontract Unit Rates. 3. 6 The project Accountant is responsible for informing the project cost Engineer about actual expenditures, currency exchange costs and greenback status. 4. Procedure4. 1 Company Services4. 1. 1 pull up stakes Cost Engineer with the Required InformationAt the project start, the project manager provides the cost ngineer with information about the cost engineering scope of work, specific client and project requirements, AS SOLD budget, any underlaying estimate details and any other information required by the cost engineer to prepare the cost engineering scope document and the control budget(s). 4. 1. 2 ready Cost Engineering Scope DocumentThe cost engineer prepares a document which lists the project requirements with respect to cost engineering and other relevant information as mentioned under item 2. 4. 1. 4. 1. Approved by Project ManagerThe approved cost engineering scope document shall be the basis for the work of the cost engineer for the remainder of the project. 4. 1. 4 Develop Control Budget(s) for Company ServicesThe project cost engineer converts with, when required, the support of the estimating incision the detailed estimate into a control budget. The cost details are consolidated and amended as required at a control level. The control level shall be at sufficient detail to allow for meaningful control and shall allow for timely and cost effective trending, progress measurement and collection of actual costs.A general consensus with all parties involved about the work breakdown structure should survive former to the actual alteration takes place. 4. 1. 5 Approved by Project ManagerThe project Manager shall approve the control budget which than becomes the original budget of the project. 4. 1. 6 Approved convert OrderAdjustments of the budget require an approved change order once the control budget has been approved. Details of each Approved change order are recorded separately at control budget level, thereby maintaining a complete back-up of the approved changes.The approved change orders together with the original budget form the current budget. 4. 1. 7 Company Services Expended be & Manhours and Invoice StatusFollowing the monthly cut off, the project accountant shall provide the cost engineer with information about all expended manhours, manhours costs and other costs of Company services. Preferably at control budget line item level, or at a more detailed level which allows for consolidation at control budget line item level. For reimbursable type projects, the project accountant shall not only provide internal costs, but also the costs to the client at the same level of detail.The project accountant shall inform the cost engineer in detail about any delayed cost bookings or provisional bookings. Furthermore, the project accountant provides the invoice sta tus information as required for the executive summary report. 4. 1. 8 Physical Progress at Control Budget LevelFollowing the monthly cut off, the planning engineer provides the cost engineer with physical progress information (percentage complete) at control budget line item level for engineering and subcontract work. The progress information must have been reviewed with the disciplines involved prior to passing it on to the cost engineer.It is preferred that the engineering physical progress is obtained from the project execution control system (PEC). 4. 1. 9 Cost forecastByanalyzing the available information about budget, actuals and physical progress and using historical data, the cost engineer makes a forecast about the final project costs at budget line item level. When there are indications of study deviations from the current anticipated finals, a bottoms up detailed estimate to complete might be required to generate a reliable forecast.Towards the end of the project the fo recast should be based on punch list items to be completed. The cost engineer shall review these forecasts with the disciplines involved. 4. 1. 10 Approved Deviation from PlanThe cost engineer prepares a deviation from plan for budget line items which forecasted costs deviate from the current anticipated finals and for which the project manager expects that management action will not result in maintaining the current anticipated finals. 4. 1. 1 Update Anticipated FinalsThe cost engineer updates the current anticipated finals only based on approved deviations from plan, approved change orders and pending change orders for which the client has already approved the change notice. 4. 1. 12 Investment and Company Services Cost Report(s), Project Cost Report and Cost NarrativesThe cost engineer prepares following the period (monthly) cut off the Company services cost reports (internal and client reports) and the investment cost report, taking the modish information into account.The comb ined reports, together with the commitment versus expenditure report, the currency mutation table and any other reports or curves that are required for the project from the project cost report. Together with the report, the cost engineer provides a news report which describes the period highlights. Furthermore, the narratives should include major developments which have come to light during the last period, but for which time did not allow for the preparation of a deviation from Plan. These late developments are to be included in accordance with the procedure in the next cost report. . 1. 13 Approved by Project Manager and Cost Reports Issued. The project manager approves the project cost report after which it is distributed by the cost Engineer in accordance with the distribution schedule as defined in the cost engineering scope. 4. 2 Investment Cost4. 2. 1 Develop Control Budget for Investment Cost. The project cost engineer converts with, when required, the support of the Esti mating department the detailed estimate into a control budget. The cost details are consolidated and amended as required at a control level.The control level shall be at sufficient detail to allow for meaningful control and shall allow for timely and cost effective trending, allocation of commitments and assessment of estimates to complete. A general consensus with all parties involved about the work breakdown structure should exist prior to issuing the control budget for approval to the project manager. 4. 2. 2 Approved by Project Manager. The project Manager shall approve the control budget which than becomes the original budget of the project. 4. 2. Approved Change Order, Update Current Budget and Anticipated FinalsAdjustments of the budget require an approved change order once the control budget has been approved. Details of each approved change Order are recorded separately at control budget line item level, thereby maintaining a complete back-up of the approved changes. The ap proved change orders together with the original budget form the current budget. The anticipated finals are updated to reflect the effect of the change order. Note that the anticipated finals may already have been updated at the time that the change order was issued for approval. 4. 2. Purchase Order/Subcontract PlacedPurchase Order and subcontract details at control budget level shall be made available for the cost engineer by the project buyer and the subcontracts manager. In particular information about options and other relevant information which will influence the final commitments is to be highlighted. 4. 2. 5 Update Commitment versus Expenditure Report and Forecast FinalThe cost Engineer shall regularly update the commitments versus expenditure report with purchase order and subcontract details. Furthermore, the project cost engineer shall evaluate the forecast finals to reflect the effect of the commitments.A design development allowance for outstanding commitments has to be included in the forecast finals at the time of commitment and subsequently reduced over time. 4. 2. 6 Issue of Key Engineering DocumentsThe occur discipline engineer shall review the material quantity requirements when key engineering documents (e. g. P&IDs, equipment summary sheets, MTOs, requisitions) are issued to determine whether forecasts require to be updated. loosely it will not be required to have documents which cover the complete scope of work.Comparing samples with the detailed estimate will generally be an adequate basis to determine trends in material and installation requirements. 4. 2. 7 revise Quantity Forecast/Prepare Change AlertThe lead discipline engineer prepares a change alert and issues it to the project manager when he determines the need to revise the current material and/or installation requirement forecast. 4. 2. 8 Vendor Quotations/Purchase Order Unit RatesThe project cost engineer shall compare the unit rates obtained from vendor quotations and purcha se orders with the unit rates in the detailed estimate. . 2. 9 Revised Unit Rates/Prepare Change AlertThe project cost engineer shall prepare a change alert and issue it to the project manager when he determines the need to change the current forecast finals as a result of change in the unit rates. 4. 2. 10 Approved by Project Manager Approved Deviation from PlanUpon approval of the change Alert by the project manager, the cost engineer prepares a deviation from plan which reflects the changed unit rates or the changed material and/or installation requirements.This deviation from plan is approved by the project manager prior to incorporating it into the cost report. 4. 2. 11 Invoice give? Update Commitments Versus Expenditure Report. The cost engineer updates the commitment versus expenditure report with the expended amounts. Furthermore, the cost engineer ensures that any design development allowances for the corresponding budget line item is removed from the cost forecast when f inal payments have been made.All parties involved, in particular, the project manager, the construction manager, the project buyer and the subcontracts manager, shall inform the cost engineer about (potential) claims or other costs for which the cost engineer might have to make reservations. 4. 2. 12 Cost ForecastBy analyzing the available information about budget, commitments and forecasts to complete and using historical data, the cost engineer makes a forecast about the final project costs at budget line item level. When there are indications of major deviations from the current anticipated finals, a bottoms up detailed estimate to complete might be equired to generate a reliable forecast. Towards the end of the project the forecast should be based on punch list items to be completed. The cost engineer shall review these forecasts with the disciplines involved. 4. 2. 13 Deviation form Anticipated Final? The cost engineer prepares a deviation from plan for budget line items which forecasted cost deviate from the current anticipated finals and for which the project manager expects that management action will not result in maintaining the current anticipated finals. 4. 2. 4 ContinuationThe Investment cost plane section of this procedure joins the Company services section at item 4. 1. 12. 5. FlowchartThe Cost Control Flowchart consist of the following interlinked sections6. References Document Number Description 6. 1 CM-PE-313 Control of Project Variations 2 6. 2 CM-PE-910 Planning Procedure 2 6. 3 Procedure for the Project Execution Control System (Later) No Iframes Gadgets powered by Google reliability is yet to become the most important characterstic of modern companies home privateness legal
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