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ForumForumProject Control...Project Control...Cost Engineerin...Cost Engineerin...Cost ForecastCost Forecast
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 2/12/2010 4:31 PM
 
User is offline Dave
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Joined: 1/28/2010
Posts: 96

I am preparing the cost forecast for my project. We have a risk allowance on job and 50% of it, we dont see going to be spent.. Should we still show it as cost for future considering its an allowance or simply increase the profit margin by that %. My employer is not a big organisation where there are set procedures for same and its upto PM/PC to decide on this.. What's the ideal/theoritical way of dealing risks in such cases ?
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 3/28/2010 5:30 AM
 
User is offline pgomes
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Joined: 3/28/2010
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Dave

As per below message, its not 100% sure cost will not be expanded, in such scenario its better to spread the 50% amount till the project completion and release it proportionately every month to profit margin. It will assist as a buffer in case risks pops up in near future as its inevitable. Hope the above info helps.
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 3/28/2010 9:18 AM
 
User is offline Dave
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Thanks mate. Great help.. Well, are you aware of any standard guidelines for cost forecast set by any recognised bodies such as AACEI.. ?

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 12/4/2010 1:16 AM
 
User is offline sbalagem
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Joined: 12/3/2010
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In my opinion the Project Stakeholders could easily identify a 50% under-utilization of Project Cost/Expenditure. Would allocate such costs under separate head as provisional sum with a clear note on likelihood of this amount not be spent on the project and spread only the true estimated cost across the time spread.
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 7/27/2011 8:46 AM
 
User is offline lya4
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Joined: 7/12/2011
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In my experience, you must to maintain and relocating this allowance where you think it could be neccesary. Unexpected cost always can appear.

Regards.
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