+44 333 303 4882 info@fusion-commercial.co.uk

Cost Management

Consistent, Reliable, Single Version of the Truth

Cost Management is one of the main deliverables of the commercial & finance functions within a contracting organisation however our experience is that too often it does not meet the needs of programmes & projects to allow them to manage their performance or provide their client with cost information which under many contractual arrangements is obligatory.

 

Communication standards

The Fusion-Commercial approach to improve the clarity of information used across the buniesss to: track performance, make decisions and inform stakeholders through the development.  The is supported by the adoption of reporting that is fit for purpose, relies on defining what reporting outputs are needed from the start and is  followed by a full review of processes and where data is held to ensure that it is extracted from a single version of the truth i.e. one source of data.

Cost management standards

The cost management solution adopted by an organisation should ideally be consistent across the business and not reinvented on a project by project basis. This will allow reliable comparison of data from year to year, period to period or contract to contract can be readily compared and analysed. Fusion-Commercial have delivered numerous solutions to our clients that transformed how they operate from a cost management perspective by following this two stage approach.

Report definition

Consult with all key stakeholders to understand what is needed, what outputs are required and in what format taking into account:

1.  Contractual obligations.
2.  Corporate reporting.
3.  Project performance management.
4.  Other client reporting.
5.  Other stakeholder reporting.

With this information, we work backwards to ensure that your systems can capture, store and analyse the data in a way that can support the outputs.

Cost Capture Systems and Processes

We then review the cost capture processes to ensure that they can capture the identified data, are consistent and fit for purpose within the business.

Confirm the labour, plant, material & subcontract cost types & define exactly what is included eg:

    • Labour: how much of the overall cost to employ is included.
    • Hired items: rates for internally owned assets to include fuel and ancillaries.
    • Stock materials: if stores are involved how are items costed in and out of the stores.
  1. Walkthrough and check the cost capture processes are fit for purpose for each category:
    • Staff: would the business benefit from staff timesheets to allocate staff costs?
    • Labour: time allocation to WBS codes.
    • Hired items: accruing cost and allocating to WBS codes.
    • Materials: capturing commitments to suppliers, accruing on receipt and allocating to WBS codes then matching invoices with accruals.
    • Stock management: how are stock items booked in, reported on and booked out with costs allocated to WBS codes.
    • Subcontract: capturing commitments to subcontractors, managing change, accruing for work done and allocating to WBS codes then certifying payments.
  2. In a parallel exercise, ensure that the systems in use support the processes and if they do not how can they be enhanced or workarounds be introduced to support the processes.
  3. Re-validate that the processes ensure that costs are consistently captured at source and allocated to WBS codes so that they can be used within cost reporting detailed within the Report Definition section above
Cost Report Re-Analysis

Very often the level of cost management that contracting organisations are able to achieve his governor restricted by how the corporate accounting systems and processes are configured.

As a result new teams are sometimes put in place to reconcile and reanalyse cost data into the required format. This is approach can be ineffective giving rise to mistakes and errors not to mention timing issues eg delays in producing cost reports due to the time it takes to carry out this re-analysis.

Sometimes all that is needed are amendments to how the processes operate, how systems are used and/or enhancements to them that allow the data to capture the source data in a different way preserving a single source of the truth approach.

Recognising and maintaining a single source of the truth and the development of processes to capture the source data in a consistent way is central to the Fusion-Commercial approach.

Working with Us

Fusion-Commercial can help you to improve your project cost management. We are the enabler who will turn this common weakness into a strength for your organisation by setting you up to succeed. Click on the link below to discuss how our agile resourcing solutions might work in mobilising your project more effectively.

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    Fusion-Commercial Associates Ltd

    62 Westgate Street
    Bury St Edmunds
    Suffolk. IP33 1QG

    info@fusion-commercial.co.uk

    +44 (0) 333 303 4882

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