Structuring cost control documents - Cleopatra Enterprise

September 1, 2021

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Working in the field of cost management, you will very likely encounter long lists of commitments, actuals, and other cost control documents that need to be reported on a frequent basis. To ease the job of structuring this cost data, breakdown structures prove to be the answer. They allow otherwise flat data to be viewed under many angles, serving the needs of the various stakeholders in the project, e.g. management, clients, and engineers.

Cost Breakdown Structure and Work Breakdown Structure

You are probably familiar with the Cost Breakdown Structure (CBS) or Work Breakdown Structure (WBS). Nowadays, a WBS is commonly required as a project cost management tool in most contracts, while the CBS often serves for cost accounting and reporting. Breakdown structures can also generate all kinds of metrics and benchmarking and can become an essential business intelligence tool for a project.

Separating budget items in cost control documents

For example, you can structure a cost report by separating the critical and non-critical budget items. This simple distinction makes it possible to focus your attention on the activities that drive the project’s performance, instead of being clouded by the less important data.

Cost control document separation by critical and non-critical budget items

The figure below shows the S-curves describing the current approved budget (red), as it is planned to be spent, compared to the actual expenditures (blue). The actuals are extrapolated up to the end of the project, indicating a slight under run of the budget.

Graph showing revised budget vs actual cost

This seems like a favourable situation, but mind you, this is the graph of the total project cost. The total actual cost at any time is the sum of possibly many individual costs that run over and under the budgeted values. Some of these actuals have a significantly larger impact on the project outcome than others. Therefore, it is wise to filter out the less critical parts and re-evaluate the case.

Current revised budget vs actual cost, forecasted to the project finish date. Only the critical project scope is plotted. The graph was obtained using the cost management software Cleopatra Enterprise.

Figure 2 filters out the less critical parts and shows only the critical project scope. As you can see, this figure provides a totally different view from the one above, one that even shows a predicted overrun of the budget! To conclude, breakdown structures help you structure your cost control documents and reveal your project’s real performance.