---
title: "Cost control and cost control cycle"
subject: "Project Engineering"
chapter: 4
key: "semester_7/project_engineering:cost-control-cycle-methods"
source: https://www.bctengineer.com/q/semester_7/project_engineering/cost-control-cycle-methods
site: BCT Engineering
---

# Cost control and cost control cycle

Project Engineering · Chapter 4: Project Implementation and Controlling

- Asked in: 2079 Baisakh, 1+2+3 marks
- Video: [The fundamentals of cost control](https://www.youtube.com/watch?v=HyuaHzRwt5w) — Taylor
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/project_engineering/cost-control-cycle-methods
- Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-4

## Question

Discuss cost control, cost control cycle and methods of cost control in brief.

## Short answer

Cost control keeps actual cost within budget by recording, comparing, analysing variances, and correcting. The cycle is budget baseline, record actual cost, compare, analyse variance, forecast EAC, take corrective action, update. Methods include cost codes, variance analysis, earned value (CV, CPI, EAC), S-curves, change control, material control, productivity improvement, and time-cost trade-off.

## Answer

#### Cost control

**Cost control** is the process of keeping the actual cost of the project within the approved budget by recording costs, comparing them with the budget, finding the variances and taking corrective action.

#### Cost control cycle

```text
Budget baseline -> Record actual cost -> Compare with budget
       ^                                      |
       |                                      v
Update budget <- Corrective action <- Analyse variance
                                      and forecast cost
```

1. Prepare the budget baseline from the WBS and cost codes.
2. Record the actual costs (labour, material, equipment) from bills and site records.
3. Compare actual with budgeted (earned) cost and find the variance.
4. Analyse the causes and forecast the final cost (EAC).
5. Take corrective action; revise the budget through approved changes; repeat.

#### Methods of cost control

- **Cost budgeting and cost codes** by WBS, with a responsible person for each item.
- **Variance analysis** and exception reports (actual against budget).
- **Earned value analysis:** CV, CPI and EAC.
- **S-curve and cash flow control** of planned against actual expenditure.
- **Control of changes** and variation orders; claims management.
- **Procurement and material control:** bulk buying, store control, reducing wastage.
- **Productivity improvement,** better equipment use, and work study.
- **Time-cost trade-off** (crashing only when the benefit is greater) and value engineering.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Cost control is...
   A. Reducing quality to save money
   B. Keeping actual cost within the approved budget by recording, comparing, finding variances and acting
   C. Setting the schedule
   D. Estimating before bid only
   Answer: B. It compares actual cost with budget and corrects. (Key point: Cost control definition)

2. What is the baseline of the cost control cycle prepared from?
   A. Weather records
   B. Contract penalty clause
   C. The WBS and cost codes
   D. Test reports
   Answer: C. Budget baseline is prepared from the WBS with cost codes. (Key point: Cycle start)

3. What is forecast after analysing cost variance?
   A. The slump
   B. EAC, the estimate at completion
   C. The WBS
   D. Float
   Answer: B. EAC is the forecast of final cost. (Key point: Forecast)

4. Which is a method of cost control?
   A. Control of variation orders, material control and earned value analysis
   B. Skipping cost codes
   C. Buying material without store control
   D. Ignoring claims
   Answer: A. Cost control uses variance analysis, EVA, S-curves, change control, material control and productivity improvement. (Key point: Methods)

## Related in Project Engineering

- [Monitoring and quality, cost, schedule control](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Amonitoring-quality-cost-schedule-control) — Project Engineering, chapter 4
- [Elements of cost control; feedback control](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Acost-control-elements-feedback-system) — Project Engineering, chapter 4
- [Cost control need; earned value; EVA approach](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Acost-control-necessary-eva-approach) — Project Engineering, chapter 4
- [Cost control; EVA 50 doghouses in 90 days](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aeva-doghouses-50-in-90-days) — Project Engineering, chapter 4
- [Cost control; EVA 15 houses in 3 months](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aeva-houses-15-in-3-months) — Project Engineering, chapter 4
- [Monitoring, evaluation, control; control cycle](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Adefine-monitoring-evaluation-control-cycle) — Project Engineering, chapter 4, asked 4×

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