Q. How often should I update my cost analysis?
The requirements of your project, program, or organization will determine how often your cost analysis should be updated. One thing is certain, however, and that is that your analysis should be regularly revisited and updated to correct outdated or incorrect assumptions, prices, and quantities. Typically, most for-profit organizations update their analyses on a quarterly basis, although some organizations require monthly reports in the case of a new project that was approved on the basis of a cost-benefit analysis, in order to keep close track on whether the costs and the benefits are meeting expectations. This is not specific to cost analyses, but is considered a best practice approach to any project or program management. Nonetheless, many non-profit, educational, or collaborative projects and programs do not have the resources and money available to re-calculate costs that frequently. It is not unusual to see updates occur only once a year or even once every five years. Although this time frame is not considered a best practice, it may be a financially necessary decision for cash-strapped organizations.
Michel, R. Gregory. Cost Analysis and Activity-Based Costing for Government. Chicago: Government Finance Officers Association (GFOA), 2004.
Focusing specifically on performing cost analyses within the public sector, this book provides information on cost concepts and explains cost analysis for government decision-making. It also introduces activity based costing (i.e., "ABC"), which is a means for analyzing costs that allocates indirect or overhead costs to the products or processes that actually incur the costs.
Venkataraman, Ray R. and Jeffrey K. Pinto. Cost and Value Management in Projects. Hoboken, NJ: John Wiley & Sons, Inc., 2008.
This textbook introduces both cost and value management in a project-based environment, giving examples throughout. It provides information on project planning, cost estimation and budgeting, cost control, financial management, and ways to define value and measure it over time. It also introduces change control, quality management, and ways to integrate costs and value within a single report.
Last updated on 08/26/13, 9:35 pm by callee