7.4.3.2 Development of Cost Schedule

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After you have estimated all costs, you have to estimate when these costs are expected to be incurred during the project implementation period and develop the Cost Schedule.

In order to determine when the resource costs will be incurred you should look at the Resource Schedule to find out when each resource is planned to be used. In case that you are using a commercial software like MS Project to develop the Project Plan, the cost schedule will be prepared automatically based on the schedule that you would have previously prepared for the usage of resources and the assignment of resources to specific tasks/ activities. The only thing that you have to do in this case is to assign cost rates and cost per-use to each of the resources and then define the cost accrual method. Usually, there are three available options for determining when the costs will accrue. You can either select a cost to accrue at the start of a task (it is preferred when you have a lump-sum amount payable at the start) or at the end of a task (it is preferred when you are holding payment until the work is finished) or you can select the prorated method according to which the cost is distributed over the task’s duration and the cost accrual is based on the completion percentage of a task. It should be noted that per-use costs always accrue at the start of a task.

In case that you are not using specialised software for developing the Cost Schedule, all the above actions should be made manually.   

The accrual of fixed costs depends on the schedule of the activities to which they are assigned. For example, the costs associated with a travel will be incurred within the timeframe of the activity or task in the framework of which the travel will take place. Another example is the cost for catering services that will accrue within the timeframe of a training seminar. As with resource costs, you can select the fixed costs to be incurred at the start or finish of a task or you can select the prorated accrual method.

As far as the administrative costs are concerned, they are either evenly distributed over the project’s duration or they are incorporated in the labour costs following in this way their distribution in time.

The exact time that contingency costs may accrue cannot easily be determined, since they are unpredictable costs. Therefore they are either incorporated (as a percentage) in the other categories of costs or more frequently they are kept undistributed and if/when they eventually accrue they are subtracted from the estimated total amount in order to track variances.  

Based on the developed Cost Schedule, you can prepare the Cost Baseline Graph that will be used to measure and monitor cost performance during the project execution phase (refer to 7.5.3.3 and to Annex 7-11: Guidelines on Earned Value Analysis). The Cost Baseline graph is usually displayed in the form of an S-curve as illustrated in Figure 7-10.

 

Figure 7-10: Typical display of a Cost Baseline Graph (S-curve)

 

The above graph represents the cumulative project costs in the time. In order to prepare this graph you need to create an intermediate table that will sum, for each time period of your schedule (week or month), the planned costs, and calculate the cumulative cost for each period (week or month). A simple Excel graph will then enable you to generate your Cost Baseline Graph.

 


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