Page 191 - Untitled-1

TEAMFLY170 CONCEPTS AND ISSUES OF BUDGETING

billing and chargeback documentation. You will have an audit trail of the charges
and costs that are being passed on to the client.

Tip If your contract calls for progress payments, you should
tie the billing into the measured accomplishments, rather than
the actual costs. See EVA in Section 8.

Cost Performance Analysis This is the place to employ EVA and ABC capabili-
ties. In order to do this, you must have set up a structured set of cost buckets (to
hold the appropriate costs) and have established a budget (so that there is some-
thing to which to compare actuals). The budgets will be maintained in the base-
line plan. Forecasting also takes place at this time. Based on the performance
analysis, there should be forecasts of when the project will be completed and how
much it will cost to complete.

Remedial Actions Most projects are very dynamic in nature. The workscope
changes. The plans change. Things go wrong. Priorities change. Forecasting will
precipitate remedial action. The project team will continually be making changes,
many of which will impact upon the project costs. Without a structured set of
practices for the management of change, things can get out of hand in a hurry, de-
stroying the ability to monitor progress meaningfully, to bill accurately, and to
measure performance. We discuss change control and scope management in
Chapter 7.1.

Replanning When changes are made and the project plan is adjusted for
such changes, it may be advisable to create a revised baseline (snapshot of the
new budgets). Whether or not to do this is a factor of whether the replanning
is part of a negotiated restructuring of the project or just the result of poor
progress on the original plan. If the latter is the case, the baseline should be
left unchanged.

End of Project Analysis and Recommendations What is that well-known saying
“Those that fail to learn from their mistakes will have to re-live them”? This is
what we do time and time again when we fail to carry out the cost management
to the logical end of the project. Cost management does not end with the col-
lection of data. It needs to be continued through a final analysis of the costs
and through to a set of recommendations. The analysis will document what
went wrong (or right) and why. The recommendations will be your legacy to