1. “Spreading the Wealth”: Matching up the Distributed Budget with the Work Packages Once the budget structure is set, the PM is left with a single budget amount that must be used to fund all the work packages Ideally, an individual budget could be assigned to each Work Package, however each budget has to be individually “managed”: Authorized for use Changed to reflected updates/contract changes etc. Monitored for amount spent vs. amount budgetted (Cost Monitoring) A “practical” project often has hundred of individual Work Packages, so a solution is usually needed to “collect” and control the budget at a level somewhere between one “lump sum” and individual “Work Packages

2. Where do we draw the line: the Control Account Each Control Account (CA) is a group of Work Packages that will be: allocated a separate budget assigned a “charge number” that people can charge their time and expenses to separately managed by a Control Account Manager to make sure Funding available matches work required Expenses charged belong to the CA the relationship between budget allowed and costs incurred is monitored $ $ $ $

3. Creating the Control accounts Needs to be clearly connected to a single body of work Must all fall under one WBS “branch” Needs to be manageable (ie. One boss) Most work has to fall under one OBS “branch” WBS Organization Breakdown Structure (OBS) Electrical Mechanical Design Systems Engineering Work Packages Electrical Drafting Control Accounts Mechanical

4. Control Account Do’s and Don’ts $ $ $ $ $ Only Work Packages included All Work Packages must be included Must be on one WBS branch “Most” work must be performed by the same organization

6. Control Account Structure Possible Solution Note: Can’t group “Curtain Walls” and “Framing” because not the same WBS branch Can’t have CA for “Foundation” or “Structure” because not the same Resources

7. Budget Allocation to Control Accounts 674-2435 674-2435 Budget is usually allocated to Control Accounts in proportion to the original estimates for all the Work Packages they comprise Two methods: Input activity estimates within scheduling tool – then “Roll up” to the Control Account level If BOE sheets prepared align with WBS at sufficient level of detail – add BOE sheets for all related Work Packages

9. The final product of cost budgetting is the “Control Account Plan” which distributes the budget to the Control Accounts (hence to Work Packages), and ties these into the corporate control accounting system© Tibor Bocz, 2008; LIMITED RIGHTS: The author grants limited rights for reproduction and distribution of this presentation material in accordance with Limited Rights Agreement BOCZ/EC0810