--- title: "Elements of cost control; feedback control" subject: "Project Engineering" chapter: 4 key: "semester_7/project_engineering:cost-control-elements-feedback-system" source: https://www.bctengineer.com/q/semester_7/project_engineering/cost-control-elements-feedback-system site: BCT Engineering --- # Elements of cost control; feedback control Project Engineering · Chapter 4: Project Implementation and Controlling - Asked in: 2065 Shrawan (old course), 8 marks - Video: [Closed Loop Systems](https://www.youtube.com/watch?v=8m0VP5_feOY) — Neso Academy - 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-elements-feedback-system - Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-4 ## Question Describe the elements of cost control, system of control and feedback control system. ## Short answer Elements are budget baseline, cost accounting, reporting, variance analysis, forecasting, corrective action, and responsibility. Control systems are open (no feedback) or closed (feedback and correction); project cost control is closed. A feedback loop has sensor measuring actual cost, comparator against budget, and corrective action, repeated until completion. ## Answer #### Elements of cost control 1. **Cost estimate and budget baseline** prepared from the WBS, with cost codes. 2. **Cost accounting:** recording the actual cost of each work item. 3. **Cost reporting:** regular reports of budget, actual cost, commitments and forecast. 4. **Variance analysis:** comparing actual cost with the budget (or earned value) and finding the causes. 5. **Forecasting:** estimate at completion (EAC) and cash needs. 6. **Corrective action and change control:** actions to reduce cost, or an approved change in the budget. 7. **Responsibility and authority:** each cost centre has an accountable person. #### System of control A control system can be: - **Open system:** there is no feedback; the output is not compared with the target, so errors are not corrected automatically (e.g. a fixed monthly allocation made without checking progress). - **Closed system:** the output is measured and fed back, compared with the target and corrected (e.g. a monthly comparison of actual cost with the budget). Project cost control is a closed system. #### Feedback control system ```text Input --> [ Process: project work ] --> Output (actual) ^ | | v [ Corrective action ] [ Sensor: measure actual ] ^ | | v +-------------[ Comparator: actual vs plan ] <-- Plan / standard (budget) ``` The sensor measures the actual cost, the comparator finds the variance against the budget (the standard), and the manager (effector) takes corrective action on the work. The result of the action is measured again, so the loop keeps the cost close to the budget. Feedback should be quick and accurate; a long delay in reporting weakens control. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. What is cost accounting as an element of cost control? A. Corrective action B. Setting the plan C. Forecasting EAC D. Recording the actual costs of each work item Answer: D. Cost accounting records actual cost per work item. (Key point: Cost accounting) 2. Which is an example of an open control system? A. Sensor-based irrigation gate B. Thermostat C. Fixed monthly allocation without checking progress D. Monthly comparison of actual cost with budget Answer: C. An open system has no feedback. (Key point: Open system) 3. Project cost control is a... A. System without target B. Closed system with feedback C. One-time check D. Open system Answer: B. Output is measured, compared with budget and corrected. (Key point: Project cost control type) 4. In the cost feedback loop, which component finds the variance against budget? A. Comparator B. Effector C. Sensor D. Process Answer: A. Sensor measures actual cost; comparator finds variance; effector (manager) acts. (Key point: Feedback roles) ## Related in Project Engineering - [Short note: Feedback control system](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Afeedback-control-note) — Project Engineering, chapter 4, asked 2× - [Evaluation vs controlling; elements of control](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aevaluation-vs-controlling-elements) — Project Engineering, chapter 4 - [Short note: Elements of project control](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aelements-of-project-control-note) — Project Engineering, chapter 4 - [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 - [Cost control and cost control cycle](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Acost-control-cycle-methods) — 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 ## Related in other subjects - [Control system and why feedback makes response faster](https://www.bctengineer.com/question.md?key=semester_3%2Fcontrol_systems%3Awhat-is-cs-feedback-faster) — Control Systems, chapter 1 - [Elements of cost](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Aelements-of-cost) — Engineering Economics, chapter 1 - [Elements of cost; prime and overhead cost](https://www.bctengineer.com/question.md?key=semester_6%2Fengineering_economics%3Aelements-prime-overhead-cost) — Engineering Economics, chapter 1 - [Feedback effect in DC motor speed control](https://www.bctengineer.com/question.md?key=semester_3%2Fcontrol_systems%3Afeedback-dc-motor-speed) — Control Systems, chapter 1