ABSTRACT

Cost management involves ensuring not only that the amounts of money spent and received are in accordance with budgets, but also that the timing of each transaction is appropriate. The project cost management function extends to predicting and reporting costs to the client, working with the client to help schedule and control expenditure and marshal the necessary funds. Cost control must be exercised before or when the costs are being committed. The contractor usually has some degree of responsibility for ensuring that the project purchaser's cost objectives are also satisfied. The customer might have to be convinced of the contractor's good intentions, because a higher initial cost might be justifiable as an investment in reducing the total life cost. The total cost approach is a way of regarding costs holistically, solving logistical problems or otherwise planning to achieve the lowest total cost.