REV.

DATE DESCRIPTION PREPARED CHECKED APPROVED APPROVED

NO.

ORIGINATOR COMPANY

DOCUMENT TITLE

PROJECT COST CONTROL & REPORTING

PROCEDURE
 Project Cost Control & Reporting
Procedure PAGE 2 of 9

Table of Contents

1.0 PURPOSE........................................................................................................................... 3
2.0 SCOPE................................................................................................................................ 3
3.0 LIST OF REFERENCES.....................................................................................................3
4.0 DEFINITIONS / ABREVIATIONS........................................................................................3
5.0 RESPONSIBILITIES & FLOW OF INFORMATION.............................................................4
6.0 PROCEDURE..................................................................................................................... 5
6.1 Project Cost Control & Reporting........................................................................................5
6.1.1 Control Budget / Current Contract Price.............................................................................6
6.1.2 Physical Progress............................................................................................................... 6
6.1.3 Value of Work Done............................................................................................................6
6.1.4 Estimation to Complete.......................................................................................................7
6.1.5 Pending Items..................................................................................................................... 7
6.1.6 Forecast Contract Price......................................................................................................7
6.1.7 Invoices as per Payment Milestone....................................................................................8
7.0 COST BREAKDOWN STRUCTURE / COST REPORT FORMAT......................................8
8.0 MONTHLY COST REPORT MEETINGS............................................................................8
9.0 ATTACHMENTS................................................................................................................. 8
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6.1.1

1.0 PURPOSE

The purpose of this procedure is to capture specific cost controls which contribute to the overall
Project reporting.

2.0 SCOPE
This procedure defines the cost monitoring, controlling and reporting process performed during
the Project period, to ensure that the evolution of actual costs during the execution is taking
place within the established control budget. Actual costs are monitored in relation to approved
control budget and time schedule. Thus, at the earliest possible stage, potential adverse
developments affecting the forecasted CAPEX can be identified and, if possible, corrective
actions initiated.

3.0 LIST OF REFERENCES

 Progress Measurement Procedure

4.0 DEFINITIONS / ABREVIATIONS

Company < Client >

Contractor PSE Engineering GmbH Germania Sucursala Ploiesti

Contract < Contract >

Project < Project Name >

PM Project Manager

PSM Project Services Manager

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PS Team Project Services Team

CTR Cost Time Resource

VoWD Value of Work Done

WBS Work Breakdown Structure

CBS Cost Breakdown Structure

MDR Master Document Register

5.0 RESPONSIBILITIES & FLOW OF INFORMATION

The Flow of Information within the Project Services Organization in respect of Cost Controlling is
shown in the chart below. The Cost Controlling function represents input for the Cost reporting
to the PSM, PM and the Client and relies on information received from the following
departments:

 Scheduling - in order to get the physical progress ratios for the WBS items

 Procurement - in order to apply the payments and dates specific for each package

 Engineering – in order to use the specific information in terms of costs regarding the
construction and commissioning phase.

The Project Services functions are responsible for providing actual Project cost controls and
ensuring support to the PM as necessary to manage effective completion of the project
deliverables.
The PSM is responsible for the application of the appropriate project cost control processes to
ensure the Project quality objectives are achieved and presented to the PM for review and pass
to the Client.
The PM shall be responsible for the cost documentation and shall train and delegate the work to
his staff accordingly. Moreover, the PM is responsible to ensure that all Project cost controls and
 Project Cost Control & Reporting
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requirements are Client Project developed appropriately and meet the Client /
Project Manager expectations.

Project Manager

Projct Services

Reporting

Cost
Controlling

Time Procurement Engineering

Scheduling

6.0 PROCEDURE

6.1 Project Cost Control & Reporting

The Project Cost Control and Reporting is a procedure comprising important information
regarding the status of the Project in respect of monetary terms and efficiency. Cost Control
must be established throughout the whole scope of the Project. The methods and structures
must be harmonized, the results must be monitored and controlled within one consolidated
reporting system.
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The Work Breakdown Structure (WBS) of the Project is the basis for the scope and splitting of
the work, budgeting / cost controlling, scheduling / progress controlling and the Project
organization.

The Project Cost Report is performed monthly throughout the Project period duration, beginning
as soon as the Project costs are incurred.

6.1.2 Control Budget / Current Contract Price

The Current Contract Price is the result of the sum between the Original Contract Price and the
Company Approved Change Orders. Thus the Control Budget might be revised during Project
execution due to upcoming Change Orders.

6.1.3 Physical Progress

The physical progress is the percentage achieved by each item of the WBS / CBS over the
Project duration. Planned and actual physical progress is calculated within the registers specific
for each phase of the Project, namely:

 Master Document Register (MDR) for the Project Management and the Engineering
phase

 Procurement Services Register (PSR) for the Procurement phase

 CCM Register (CCMR) for the Construction and Commissioning phase.

From these sources the calculated percentages of planned and actual physical progress at an
aggregate level will be manually transferred into the Cost Report.

Please refer also to the Progress Measurement Procedure.

6.1.4 Value of Work Done

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The Value of Work Done can be defined as the amount of work actually achieved to date
(earned value) in monetary terms. The VoWD cumulative is equivalent to the actual costs
incurred up to the cut-off date. The Value of Work Done for the Project will be calculated by
multiplying the Original Contract Price / Current Contract Price by the physical progress
achieved by each item of the WBS / CBS. This will be controlled against respective CTRs and
will provide an overall achieved completion which is directly comparable to the planned one. The
physical relative progress for each deliverable contained in the specific phases of the Project is
obtained by multiplying the absolute progress value of each deliverable corresponding to each
control point with the weighting factor. Deviations from planned baseline will form discussions at
the monthly meetings and any corrective actions to address areas of concern will be
considered.

6.1.5 Estimation to Complete

The Estimation to Complete is the value obtained by the difference between the Original
Contract Price / Current Contract Price and the cumulative Value of Work Done.

6.1.6 Pending Items

The Pending Items refer to specific claims covering potential Change Orders plus items which
have not yet been formalized into pending Changing Orders such as site instructions, site
queries, revised drawings / specifications, claims etc.

6.1.7 Forecast Contract Price

Cost forecast is also a vital consideration in determining the Project status and provide the
Company with information regarding the anticipated final value of the Contract. Cost forecast will
be generated on a monthly basis, by discipline. All the monthly progress percentages will be
applied directly to the current schedule / costs and the resultant forecast provides an estimated
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value to completion. Forecasting will incorporate also approved changes in order to determine
the most realistic end value.

Thus, the Forecast Price will be the result of the sum between the VoWD as of the cut-off date,
the value of the remaining works to be done as per the schedule, meaning the Estimation to
Complete and the Pending Items.

6.1.8 Invoices as per Payment Milestone

The amounts of the services rendered will be invoiced on the aggregate project level as per the
Payment Milestones. However, the invoice shall have attached details of the items invoiced.
Periodic and cumulative total amounts of the invoices will be displayed in the Cost Report
analyzed by amounts paid and unpaid as per cut-off date.

7.0 COST BREAKDOWN STRUCTURE / COST REPORT FORMAT

The Cost Breakdown Structure is in alignment with the Work Breakdown Structure, which is the
basis of the cost controlling.

The Cost Report format is detailed under Appendix 1 attached to this procedure.

8.0 MONTHLY COST REPORT MEETINGS

Based on the preliminary Project Cost Report, Monthly Cost Report Meetings will be held. The
results will be considered in the final Project Cost Report.

9.0 ATTACHMENTS
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Appendix 1 Cost Report Format