Cost Control and Value Management

All Project managers who are ethical and very professional find it important to discover and report any of these issues as soon as they are discovered. Earned value management is a method that is effective in tracking and monitoring costs and expenditures on the project in relation to the work that has been completed. It draws its strength from its ability to monitor cost, schedule and the level of activity completion at the same time. It makes use of the work breakdown structures and planned expenditure formulated during the initial stages and monitors the implementation of the plan throughout the life cycle of the project. In order to fully and sufficiently understand cost control and value management, it is essential to take deeper look into work packages, work breakdown structures, project control charts, cost baseline, time baseline and scope baseline of a specific project.

Work packages carry a lot of importance in cost control and value management. Work packages make it possible for different components of the project to be worked on simultaneously. Several teams work on multiple tasks in parallel while observing the specifically defined timelines for their work packages. When all the teams have successfully completed their specific work packages, the whole project is brought together and integrated smoothly. Work packages also allow for aggregation of costs of specific activities at the lowest levels. It is also referred to as the S-Curve and is time-staged cost model used to determine the cost variance of a project. The approximated costs of the project are summed and mapped on a graph that shows the expenditure all through the life cycle of the project.

The project’s cost variance is the difference between the intended cost baseline’s height and the true cost. Cost baselines help project managers to make easy comparisons between actual and estimated costs of a project and to take necessary actions in good time. Earned Value Management (EVM) is crucial in helping the project manager (PM) understand his project status. With these, the manager of the project can gauge the expected budget for the project, the variance to the budget at completion, and the time of completion. It also helps in identifying risks in the project. These details describe the project status. A control chart determines a processes’ behavior, stability and predictability over time. It is constituted of control limits, specification limits and a center line which shows the trend of values toward the control limits.

Change mostly occurs to better a product or process. It is therefore necessary for a PM to identify what to improve. This involves setting goals, identifying resources and people to oversee the process. After this, the manager of the project is required to pitch his idea to the shareholders and he should ensure a high level of “buy-in” to enable his idea to be accepted. The change should then be planned for. It is important to celebrate success and recognize milestone achievements. This is an important part in any project as it helps in the adoption of the change. The change management process should then be continuously revised and improved. Cost control and value management is a wide topic and to fully grasp what it entails it is necessary to break it down to time baseline, cost baseline, earned value management, project control charts, work packages and their interrelations.