Projec6 Cost Management

Project Cost Management

These days you would look to your Project Software to provide the facilities you require for effective Project Cost Management.

For this to occur, the software needs to assist you to manage the four major interlinked elements that define the project cost, being:

  • Project Scope – the contracted requirements and project size
  • Budget – should include all costs, contingencies and project contribution to profits
  • Time – being the duration of the tasks
  • Resources – the labour, capital equipment and construction materials

With Muli as your Project Software, you have a sophisticated Variation Management system to assist you not to be financially disadvantaged by “scope creep”.

A project manager can raise a Variation as soon as they identify extra scope of works.  A ballpark amount can be associated and after receiving quotes from the subcontractors concerned, the figure can be refined and the variation upgraded to Submitted and sent to the client for review and approval.  Even though not approved, even a Ballpark variation is visible to the management via Muli's Project Review Cost & Processes program.  When finally approved, the variation will adjust the project budget accordingly.

The other side of scope management is controlling the scope of works contracted to the subcontractors, and Muli uses a Subcontractor Amendment system to manage the communications and the related changes to Progress Claims. 

So no matter the requirements or the change in project size,  Muli software can greatly assist in this area of Project Cost Management.

The second element, Budget control, is a major pillar of the Muli system.  Muli is founded on a logically structured Cost Allocation Code system that covers all project costs, contributions to profit and overheads.  Since everything in Muli's project accounting system is a project – even Overheads.

The integrity of the budget is maintained by Muli's strict “No Budget – No Order” and” No Order – No Payment” rules.  So Muli has:

  • Purchase Orders
  • Subcontract Orders
  • Income Orders
  • Labour Orders
  • and in the future, Equipment Orders

Since the Total Budget must equal the Contact Value plus approved Variations, Muli has secured the Budget in terms of Project Cost Management.

Muli provides a Labour Cost Forecasting routine to enable you to fully assess the Time Element of the Project.  The process commences with the raising of a labour order, since as stated earlier, you can't process an employee timesheet unless there is a labour order created against the relevant budget of the project.

When you raise the labour orde,r Muli asks for the expected total cost and estimated total hours.  This provides an implied cost per hour.  As employee time-sheets are posted against the labour order, Muli is able to track the hours and cost and calculate an achieved rate per hour.  Muli is then in a position to forecast hours and the implied rate to arrive at a final forecast cost which is actually “team by duration forecast to completion”.

So, in terms of the Time element, Muli has a solution through its Labour Cost Forecasting.

Muli's Inventory and Assets modules are in development, but the “hooks” exist already for this data to be used in achieving the best outcome in terms of Project Cost Management.