ABSTRACT
This chapter explains the methods by which a project manager uses estimates and schedules to control the cost of a project. It describes conventional cost control and how it evolves into an integrated cost control system. The chapter also explains the difference between financial and cost control. It provides practical applications with regard to cost collection, cost reporting, forecasting and subsequent actions to keep a project within budget. An effective cost control system requires a hierarchy of periodic status reports. Cost data frequently require allocation of accounts to different products and processes. The subsidiary ledger is therefore only an extension of the control account. There are many ways of identifying incorrect data inputs, one of which is the "sum-of-digits" method. The financial statements produced by the accountant's book-keeping procedures will not give a project manager the ability to judge the value of the progress made and thereby is not good enough for controlling purposes.
