It is the phenomenon in which the client / contractor has to spend more money for the completion of the project than originally estimated. i.e. project goes over budget.

Time over-run is the phenomenon in which the project gets delayed beyond its expected completion time due to certain difficulties. More time is required to finish the project than initially planned.

Project cost control should be carried out throughout the life of the project from the inception of the idea up to the final completion of the project.

Project cost control is divided into two major areas:

a. Cost control during the design stage so that the proposal under design fall within the original estimates.

b. Cost control during construction so that project is completed within budget.

One major factor that has been identified as reasons for cost overrun in most projects is design errors. It is important to note that proper representation of client’s requirement and the blue print to achieving good technical input to project execution are usually mapped out base on project designs. Thus a design with errors practically means wrong or insufficient representation of project deliverables.

Delay and cost overrun in project could be as a result of scope change. Scope is the term that defines the entire deliverables that is expected at the end of a project. Therefore, logically, it can be said that all project plans, estimation, schedule, quality and base lines are usually designed base in the initial project scope.

Thus, any change in the project scope during execution will mean that the entire initial project plan will have to be reviewed such that a reviewed budget, schedule and quality will have to be developed. This means more time and resources will be needed as against the initial baseline.

Another major reason for cost overrun and delay in project is inappropriate and inadequate procurement and faulty contractual management system. Contracts read out virtually every aspect of a business correlation, including payment terms, pricing, and service levels. Therefore a contract that has not highlighted the entire project scenario may lead to dispute in the contract system.

The complexity of project could also be a contributing factor to delay and cost overrun. Complexity could be define in terms of the size of the project, most mega projects tend to have relatively long implementation period when compared to small project.

This could be affected by inflation, change in material price and changes in exchange rates such that the initial budget may need to be supplemented for the project to be completed. The result could be cost overrun and long chains of negotiation which will lead to delay.

Corrective Measures to Avoid Cost over-runs

1. Pay a lot of attention to project planning
2. Check a vendor’s /Contractor’s capabilities before hiring
3. Attempt to stay within the scope that was originally planned
4. Use good scheduling tools & techniques
5. Make sure the stakeholders in the project are on the same page

Effective communication can help reduce the delays by avoiding working on wrong things and making the scheduling work better. As a project manager, it is his responsibility to keep the communication among the team members so the work can be carried out seamlessly.

Constantly track and measure the progress

Controlling is measuring and correcting the individual and organizational performance to ensure that events conforms to plan.

It involves measuring performance against goals and plans, showing where deviation from standards exists and helping to correct them.

In short controlling facilitates the accomplishment of plan.