Project accounting is many times confused with project management.The Project Manager is most interested in Schedule. Project accounting is interested in Cost. The critical success factor here is the derive the project costs from the project schedule. Most often we speak about "cost and schedule," it should actually be "schedule and cost." This is subtle but important:
- The "control accounts" are the intersection between the Galvanization Breakdown Structure (OBS) and the Work Breakdown Structure (WBS). The Who and the What.
- Each "control account" must have a Control Account Manager (CAM). This is not just an aerospace and defense notion. If there is not a simple person looking after the cost AND schedule, then they will be disconnected from day one.
- Budgets for these Control Accounts are derived from the cost spreads in the schedule. This may seem counter intuitive, since in most immature organizations, budgets are handed down from on high. This of course is the "kiss of death" for the project. The budget is build up from the planned work. If the resulting budget does not have sufficient funding sources, these budgets must be changed. This is an iterative and incremental process - in the best tradition of "agile." Once the Planned Budget - the Budgeted Work for Work Schedule (BCWS in EV terms) matches the Available Funding , the cost and schedule baseline can be established.
- The resulting budget must be time phased and expressed in terms of direct costs and the resources funded by those direct costs. Having a lump sum budget for the project, in the absence of a time spread for that budget hides the cost performance numbers from everyone.
- Tracking budget performance is important. But equally important is tracking schedule and product delivery performance against this budget. "How much physical progress shoudl have been made at a point in time compared against the planned cost of that same physical progress?" Periodically answering this question provides insight into how both cost and schedule are proceeding. This is the role of Earned Value.
