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A DETAILED LOOK AT THE PHASES OF COST 169

Tip It is a good idea to try to use a common WBS for estimat-
ing and developing the schedule. However, this is not always
practical, because estimating is often based on common quan-
tities, involving several individual tasks. Try to compromise by
having at least one or two common levels in the WBS and the
estimating structure, before branching out as needed to facili-
tate each function.

Once the CPM budget has been developed and approved, it should be set as a
baseline. The baseline is a snapshot of the approved budget before changes and
actuals are processed. The baseline is used for measuring status and performance.

Collection of Actual Cost Data Actual cost data may come from multiple
sources. Labor-based costs are usually derived from time sheet inputs and the li-
brary of billing rates. Other expenses will come from invoices. There are several
issues that need to be addressed when one is setting up the cost collection system.
These include:

• Who has authorization to process charges against the project?
• Have you set up all the cost buckets (accounting-based charge numbers)?
• Have you synchronized the timing of the cost status with the timing of the

task status? This is needed to have a valid analysis of costs vs. accomplish-
ment (see EVA in Section 8).
• Is there a procedure to review and accept charges?

Trap Invoices rarely have information on them that detail
which tasks to apply the costs. For purchasing and CPM inte-
gration, the buyer should note the reference task IDs on the
purchase order. POs are often issued for items that involve
more than one task. In such cases, the buyer must allocate the
costs to the tasks (by percentage or actual values).

Billing and Chargebacks If you have set up a robust system for the collection of
actual costs, as described above, you will have the capability to create automated