7.5.3.1 Record actual costs (or expenses)

In order to record the actual costs (or expenses) which accrue during the project’s lifecycle, there are several steps that you have to follow:

1.	Save or update a baseline cost schedule, if you haven't already done so in the planning phase. This will enable you to compare the information in your baseline cost schedule to your up-to-date cost schedule later in the project and will help you to identify and solve cost problems.

Record resource costs (labour, equipment and material costs) by using the information from the updated resource schedule (i.e. approved timesheets for labour resources, actual usage time of equipment and actual quantities of materials) and applying the appropriate cost rate to calculate the actual costs. In case that some resources involve “per use” cost you should collect information from the responsible staff members about the actual number of uses of each resource in order to calculate the total costs. Finally for the resources which involve both “rate-based” and “per use” cost, you should calculate the two cost components separately and then add the two figures to calculate the total cost.

Record travel, administrative or incidental costs (or expenses) by using an Expense Form, which should be completed by the project members to request the payment of an expense (or cost) on the project (or by the Contractor in case that the contract includes provision for reimbursable expenses) and submitted to the Project Manager for approval. It is recommended that in case of projects implemented with own resources, the Expense Forms are completed on a regular basis (e.g. once every two weeks or once a month) to enable the Project Manager to monitor the financial progress of the project. In case that the Expense Forms are completed by the contractor then they should be asked together with the progress reports (usually every three or six months) or as a separate financial report.

The Project Manager prior to approving each Expense Form will have to:

•	Confirm that the activities/ tasks for which the expense occurred are those identified in the Activities Schedule and assigned to the specific resource according to the Resource Plan.

•	Confirm that the incurred expense was initially budgeted and included in the Cost Plan.

•	Judge if any unbudgeted expenditure is necessary, fair and reasonable and if he/she has the authority to approve such expenditure. If the expenditure exceeds his/her approval limits then it may require the approval of the Project Steering Committee or even the approval of the Funding Agency.

Based on the above information, the Project Manager will either approve the expense or request further information/ clarification from the person submitting the Form prior taking the final decision or decline the expense (or part of it) and raise an issue with the person submitting the Form.

The data from the approved Expense Forms are then recorded in the Cost Schedule which is updated to reflect the actual costs occurred by the resources against each task.

For the purposes of this Guide a template of an Expense Form is provided in Annex 7-10. It should be noted that this template can be modified to meet the tracking requirements of a specific project.

Decide which costs you want to track and how much detail you want in the cost information. For instance, in case that the project is implemented by a contractor you may not want to track any associated travel or administrative costs incurred by the contractor, unless there is a relative provision in the contract for reimbursable costs. However, even if you want to track such costs, you may not need so much detail like: analytical description of each expense, attached invoices for every single expense, etc. In this case it may suits you to collect information on total amount per type of cost (e.g. Travel Expenses = €2.000, Administrative Expenses = €800, etc.).

Decide how often you will collect information about incurred costs and how often you will update the cost schedule. For example, are you going to collect information and update your cost schedule once a week or once a month or once every three months? Selecting a frequency that is convenient and fits into your schedule increases the likelihood that you will collect actual costs information timely and you will have an up-to-date cost schedule.