What is Costrac? Approval of Budget against WBS. Feasibility Study Completed. Define & Map WBS. Approval of WBS. Estimate

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1 The outcome of any venture is most often affected by the ready availability of useful information on which timely decisions can be taken. For project success, the need is therefore to know where you re going, to understand what the future holds and to take action in sufficient time to keep things on track. So, where financial accounting methods allow you to know exactly where you are, Costrac has been designed to tell you where your costs are going. What is Costrac? Costrac is a project cost management tool designed to assist project managers in ensuring that projects undertaken are completed within the authorized budget constraints. Costrac is designed to complement your company s existing financial system and to add value in the project management environment with specific reference to cost forecasting and cash flow management in relation to the current project schedule. Costrac is used to compile project cost estimates and used to manage the capital cost estimate once it is approved. Spend valuable time up front structuring your project for control, management and assembling your capital cost estimates. Costrac is a flexible tool designed to provide the user with the configuration capacity to suit varying project control needs and to provide the required control of all project costs. This ensures comparative data is instantly available and reportable. Feasibility Study Completed Estimate Define & Map WBS Approval of WBS Approval of Budget against WBS Load WBS into Costrac & Schedule Procure as per Proc Pack Strategy Project Implementation -Transactions Purchase Requisition Payments Schedule Progress Earned Values Cost Reporting FFC 1

2 2 Costrac is a web based product that enhances the project s capability with respect to Project Cost Management, which includes processes such as Project Budgeting, Project Forecasting, Earned Value and Cost estimating. It integrates seamlessly with wide variety of planning software including Microsoft Projects and Primavera and when coupled with the project programme or scheduling/planning software system, Costrac provides the added dimensions of period to period cost control, cost trend analysis and cash flow management as well as giving you features that allow you to control your costs in multiple currencies. By utilising all of Costrac s features, complete project cost control is made possible over the life of any project. To ensure that projects are completed within the budgetary constraints imposed on them, control is primarily achieved by using the Imprest principle which states that no expenditure can be authorised without a previously authorised commitment being in place. The fundamental premise of this principle is that you cannot spend unless you have approved funds available. The amount of time spent managing your cost control system will be considerably reduced and allow you to capture data with junior personnel so that you can use your valuable time more effectively doing what-if scenarios and examining cost trends and forecast costs. Costrac s unique tools help you focus on structuring and managing costs in a manner useful to the project team. It also treats predicted costs from a current cost platform rather than merely reporting on historic data. Costrac has been designed specifically to give you control of the project costs. Costrac provides a means to set up structured budgets facilitating management and control of cost transactions. Costrac ensures that comparative data is instantly available allowing informed cost decisions to be made timeously and can be set up to extract historic cost data for estimating purposes on future projects. Costrac is a flexible tool providing the user with the configuration capacity to suit varying project control needs and to provide the required control of all project costs. When coupled with the project programme, Costrac also provides the added dimensions of period to period cost control, cost trend analysis and cash flow management as well as giving you features that allow you to control your costs in multiple currencies. Costrac contains all the essential elements for ensuring good cost management. By utilising all of Costrac s features, complete project cost management is made available over the life of any project. Costrac contains all the various cost management operational processes required to effectively manage project costs.

3 Functions at a Glance Scalable Charting and Reporting User defined project periods Costflow Templates and S-Curves Structured budgets using Work Breakdown Structures (WBS) or Cost Breakdown Structures (CBS) User configurable cost codes for summarization, extract and grouping purposes Workflow Under the Administration rights, super-users can define the lowest amount (in the base currency) for which approval is required per project, per user, per document (e.g. Journals, Change Orders, Purchase Orders, etc.) Change Notices and Change Orders - Record and authorize budget changes Purchase Requisitions / Variations - Authorize commitment of budgeted funds Work Requisitions / Variations - Authorize commitment of budgeted funds for internal time related costs Journals - Authorize simultaneous commitment and charge of budgeted funds for internal costs Timesheets - Add Project Resources and charge time related costs to the project Payment Certificates - Reconcile claims for procured goods or services against commitments Reports - Choose from a suite of more than 100 standard reports to produce various: Lists, Registers, Cost Summaries In conjunction with your project program it provides the added dimension of period to period: Cost control, Cost Trend Analysis, Cost Flow Management User Friendly Features Web-based system that is accessible from anywhere in the world! Multi-language interface English, French, German, Russian, Italian, Portuguese, Afrikaans, Zulu Breadcrumb navigation providing easy access to previous screens Advanced User and Group management Integrated and easy to use Help Operating Platform Compatible Operating Systems: Windows XP Windows Vista Windows 7 Windows Server 2003 Small Business Server Windows Server 2003 Enterprise or Standard Windows Server 2003 R2 Enterprise or Standard Windows Serve 2008 Enterprise or Standard Windows Server 2008 R2 Enterprise or Standard Compatible Database Systems: MS SQL 2000 or MS SQL 2005 MS SQL 2008 Server Side Applications MS Office IIS (Internet Information Services) 6 IIS (Internet Information Services) 7.Net Framework version 3.5 Crystal Reports Distribution dotnetcharting Hardware Requirements System Requirements: Approximately 200Mb free disk space. ±2GB Ram for best performance under heavy user load Dual Core, Core 2 Duo and Upwards Best with a graphic display system capable of 1024 x 768 pixel resolution. 3

4 Key Benefits, Reporting & Analysis Costrac can be integrated with most ERP financial systems ensuring that data is entered once and is always available to the operators. Interfacing Costrac with a project scheduling tool (Primavera, MS Project) enables the costs to be distributed in time and thereby the cashflow can be managed by the schedule. Resulting in accurate cashflow forecasting based on progress achieved which is fundamental to good financial management. Cost distribution, histogram and S-curves 4

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6 Cost Review At any point during the project life-cycle, Cost Review provides cost information for the project in various views. Costs can be filtered by CBS Level item, Cost Centre, Proc Pack or any other attribute that has been set up for the CBS. In all cases the cost detail will be displayed as: Original Budget Approved Changes Current Budget Commitments to Date Payments to Date Forecast Payments All the project cost data in its varied forms are available for presentation in hundreds of standard report formats. These can be modified to user requirements or complete new reports developed as required. 6

7 Committment Payment Status Report Committment vs. Budgets Report 7

8 Committments Register Actuals Register Report 8

9 Payment Certificate Register Procurement Reports This set of reports will supply the various ways in which Procurement related information can be viewed. The following is a list of various Procurement Reports and some example views: Asset Register and Vat Enquiry Register Plant Tag Codes Delivery Channels Packages Asset Register Report 9

10 Cost/Schedule Integration Cost/schedule integration minimizes human error while maximizing project control productivity and increasing project control analysis and diagnostic capability to support more effective project reporting and improving overall project performance. It also enables a controlled shift from cost flow to cash flow for the baseline and provides a very efficient input to the project dashboard. Integration between the cost management system (Costrac) and the scheduling tool (such as Primavera P6 or MS Project) is achieved by the use of keys. These keys are a unique set of codes which are exported out of Costrac and then mapped to the relevant activities in the schedule where they are manually coded to the relevant activity in the schedule as user defined codes. The ease at which one is able to map cost to schedule is inter alia dependant on how well the work has been defined during the initial set up stage when the CBS (Cost Breakdown Structure) is established. Through these keys Costrac is able to read the start and finish dates in the schedule, as well as progress information, weightings etc, which are then imported into Costrac. 10

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13 Principles for integration: It is the intention that a re-usable integration solution should be developed. For this to work in various environments it is imperative to describe firm limits within which the solution will work. These should result from a detailed design activity. However, the following basic principles should be considered as basis for the integration: Costrac should be the only source of detailed project cost reporting (budget, actual, planned). The reason for this is that Costrac carries the lowest level of planning detail. It is not essential for a complex WBS structure to be created in ERP, as ERP is not the basis of detailed project reporting (as explained above). If a WBS structure is created in ERP it should remain essentially static, and can only be extended horizontally if a new major component is added to the project. A WBS structure in ERP could form the basis of high-level project budgeting and responsibility reporting (at that top level). Thus the project structure in ERP should be confined to a Level 2 WBS at the lowest level. Changes to the project budget arising from contract variations will be managed in Costrac. Budget variations could be aggregated monthly, and can then be handled as a new planning version of the project budget in ERP. That will result in a monthly reconciliation of the project budget between Costrac and ERP. Costrac shall be the source for all quantity information, i.e. quantity of materials ordered / received / consumed, and number of hours spent. ERP shall be the only source for actual costs and changes to Requisitions and Orders, whether it is the result of procurement or resource time (i.e. Costrac provides the quantity, ERP provides the actual cost). Illustrative process flow diagram between Costrac and ERP. 13

14 Earned Value Management System Earned value management (EVM) is a project management technique for measuring project performance and progress in an objective manner. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. Earned Value Management is notable for its ability to provide accurate forecasts of project performance problems. Areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. Essential features of any EVM implementation include; 1. A project plan that identifies work to be accomplished, 2. A valuation of planned work, called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS), and 3. Pre-defined earning rules (also called metrics) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP). EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV. Through cost/schedule integration the process of generating Progress S-Curves and EV % s becomes much simpler where project costs are managed in the Cost Management System (Costrac) and progress is managed in the planning tool (Primavera P6). Earned Value (in money terms) is done in the Cost Management System (Costrac) and Progress is done in the schedule (Primavera P6) in terms of Weighted Values that are an expression of the amount of work (labour). In order to generate Progress S-curves based around the amount of work, you need to define the work involved in each task at which progress is measured. Essentially you want the amount of man-hours. To derive these, one can then simply use a weighted value which is a function of the % labour content in each keyed work summary cost linked to Costrac. By definition this would not include spurious items such as contingency, escalation, insurance or client costs. The Earned Value Curves are expressed in terms of the value of work done and are generated in Costrac. The Earned Value would be derived from the invoice value divided by the forecast cost multiplied by the current budget. Where no invoice exists or the invoice is late, one could simply use the % work done value that will be available in P6. Summaries and Analysis reports are intended to empower the Project Controls Manager to analyse the overall project cost performance. To that end, the following reports can be produced by the system. 14

15 Cumulative Earned Value Curve Report Costflow Costflow is defined as the point in time when any task, or work, has been completed and certified as per the project schedule and scope, and when payment for such work is due. In other words, the moment any cost is inherently due. Depending on the size, structure and policy of both the client as well as the supplier company, the amount of time between Costflow and Cashflow that elapses is different. Delays in invoicing, certification or payment terms will all influence the time elapsed between the two processes. For the purposes of Cost Management, Costflow is the method used to calculate Earned Value and Progress. COSTRAC therefore does a Costflow curve for budget lines as well as all commitments. When informed by the various cycles in the project accounting processes, this enables the Cost Engineer or Project Accountant to accurately predict Cashflow. 15