ABSTRACT
Cost management comprises both reporting and control. Cost control must be exercised at the time when the costs are being committed. The initial project budgets must be derived from the cost estimates used when the tender or internal project proposal was prepared. The total budget should spread over the project work breakdown structure so that there is a specified budget for each work package. Budgets for purchases and for subcontracts have to be expressed in the appropriate project currency. Relevant packaging, transport, insurance, duties and tax must be included. A more accurate approach to monitoring purchasing cost performance is to tabulate actual cumulative project purchasing costs against the estimates for the corresponding items or work packages. Milestone analysis is one of the simpler methods which managers can use throughout the project life cycle to compare the actual costs and progress experienced with the costs and progress planned.
