COST MONITORING

Presented by
SOMAYO VARAM
7th semester , Civil
MIT
Content:
 Introduction
 Features of cost monitoring

 Cost monitoring techniques

 Total cost

 Advantages of cost monitoring

 Disadvantages of cost monitoring

 Conclusion
Introduction:
 Cost monitoring is concerned with the process of
planning and controlling the budget of a project.
 It includes activities such as planning,
estimating, budgeting, financing, funding,
managing, and controlling costs so that the
project can be completed within the approved
budget.
 Cost management covers the full life cycle of a
project from the initial planning phase towards
measuring the actual cost performance and
project completion.
Features of cost monitoring:
 Cost monitoring process involves setting targets
and standards, ascertaining the actual
performance, comparing the actual performance
with standard, investigating the variances and
taking corrective action.
 It aims at achieving the standard.

 It is a preventive function.

 It contains guidelines and directive management

such as, how to do a thing.
Cost monitoring techniques:
 Budget planning
 Cost tracking

 Time management

 Project change controlling

Change control contains five stages :

i) Proposing a change
ii) Summary of impact
iii) Decision
iv) Implementing a change
v) Closing a change
 Earned value use.
 In CPM, time is related to cost and the object is
to develop an optimum time-cost relationship.
 If a project goes on indefinitely, the cost will
increase.
 Similarly, cost will increase if project is
expedited, and
 Cost is minimum at some optimum project
duration.
Total Cost:
There are two types of costs associated with a
project:
(i) Direct costs:
It represents the expenditure which can be
allocated to different activities in a project, like
manpower, material etc.
(ii) Indirect costs:
It related to the control or duration of the
work, financial overhead, lost production etc.
TOTAL PROJECT COST AND OPTIMUM DURATION
Advantages of cost monitoring:
(i) It helps the firm to improve its profitability and
competitiveness.
(ii) In the absence of cost control, profits may be
drastically reduced despite a large and increasing
sales volume.
(iii) It is indispensable for achieving greater
productivity.
(iv) Cost control may also help a firm in reducing
its costs and thus reduce its prices.
(v) If the price of the product is stable and
reasonable, it can maintain higher sales and thus
employment of work force.
Disadvantages of cost monitoring:
 Reduces the flexibility and process improvement.
 Restriction on innovation.

 Requirement of skillful personnel to set

standards.
Conclusion:
Cost monitoring is the practice of identifying
and reducing business expenses to increase
profits, and it starts with the budgeting process.
Reference:
Project Planning and Control with PERT and
CPM by Dr. B. C. Punmia and K.K. Khandelwal
THANK YOU.