Aspects of cost control

As defined by the American Association of Cost Engineers, cost control (project controls) is the application of procedures to monitor expenditures and performance against progress of projects and manufacturing operations with projected completion to measure variances from authorized budgets and allow effective action to be taken to achieve minimal costs (and acceptable timetables). This conjures a variety of responses dependent upon the concept and definition of one's employer organization and the method with which this activity is implemented. The spectrum is broad, ranging from very complicated, highly sophisticated computer system to reinventing the wheel for each application. Each organization must find the mode most comfortable and compatible with its goals, resources, and business ventures. The objectives should, however, be common to all: to spend investments wisely, to encourage cost-conscious attitudes, and to promote good value judgements. Regardless of industry, and whether a small business or a large corporation, sound principles of cost control apply. This article will expand, therefore, four aspects of cost control whether applied to capital or operating costs for exploration, extraction, construction, manufacturing, maintenance, or any number of like ventures.