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Spreading the Wealth: Matching up the Distributed Budget with the Work PackagesOnce the budget structure is set, the PM is left with a single budget amount that must be used to fund all the work packagesIdeally, an individual budget could be assigned to each Work Package, however each budget has to be individually managed:Authorized for useChanged 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

#3PM3_T_B Planning TimeWhere do we draw the line: the Control AccountEach Control Account (CA) is a group of Work Packages that will be:allocated a separate budgetassigned a charge number that people can charge their time and expenses toseparately managed by a Control Account Manager to make sureFunding available matches work requiredExpenses charged belong to the CAthe relationship between budget allowed and costs incurred is monitored

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#3PM3_T_B Planning TimeCreating the Control accountsNeeds to be clearly connected to a single body of workMust all fall under one WBS branchNeeds to be manageable (ie. One boss)Most work has to fall under one OBS branch

EngineeringDraftingDesignElectricalSystemsMechanicalElectricalMechanical

WBSOrganization BreakdownStructure (OBS)

Control AccountsWork Packages

#3PM3_T_B Planning TimeControl Account Dos and DontsOnly Work Packages includedAll Work Packages must be includedMust be on one WBS branchMost work must be performed by the same organization$$$$$

#3PM3_T_B Planning TimeControl Account Structure ExampleCreate a control account structure from this WBSResources:Project Management Carpenter Masonry Metalworker Plumber

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Control Account StructurePossible SolutionNote:Cant group Curtain Walls and Framing because not the same WBS branchCant have CA for Foundation or Structure because not the same Resources

#3PM3_T_B Planning TimeBudget is usually allocated to Control Accounts in proportion to the original estimates for all the Work Packages they compriseTwo 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

Budget Allocation to Control Accounts

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Once control account structure established, charge numbers are assigned to each either in the scheduling tool (eg. PMPlan) or (usually) within the company control accounting/ERP systemThe 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

CostAccount #Work PackageBudget AmountAccounting Info/ERP Integration 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/EC0810The Control Account Plan

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