An Effective Cost Control System

by Tom G. Mendel, Rust Int Corp, United States,

Document Type: Proceeding Paper

Part of: Excellence in the Constructed Project


Project budgeting consists of converting the capital cost estimate into accountable cost centers by physical or process area and classifications of work. The primary purpose of the project budget is to provide the client and management on a continual and current basis, an official statement of a project's financial condition. One of the prime functions of RUST's cost control system is to indicate variances from the original cost estimate. This capability allows the management team to take prompt and positive action to institute corrective measures. A Work Breakdown Structure is established before the budget estimate begins so that a workable budget will be prepared in the manner in which the project will be constructed. Cost reporting is provided through the summarization of cost at the following levels: Level 1, Financial Status Reports; Level 2, Combined Cost Reports; Level 3, Cost by Categories Reports Level 4, Detailed Cost Reports. These are discussed in the paper.

Subject Headings: Control systems | Structural control | Construction costs | Construction management | Assets | Client relationships | Personnel management | Construction industry

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