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## The Open University

Skip to 0 minutes and 1 second SPEAKER: In this video, we will show you how to record the actual costs on activities in our budget document. To do this, we need to open our budget file, and we move to the second sheet named actual intermediates. This sheet reports the budgeted costs we’d entered previously. And it has some blank columns to insert the actual costs. In this cell, we fill in the period related to this recording of costs, in this case, day 16. In this column, we fill in the actual pay rates for staff. You will notice a light appearing in the column to the right. This shows the difference between the rate of pay that was budgeted for, and the actual rate that was paid.

Skip to 0 minutes and 45 seconds In this case, the difference is zero, so the light is green. If the actual pay rate is higher than in the budget, then the light is red. This is because we are paying more than what we planned and the difference is negative. Now, let’s fill in the values for all the activities that have taken place by day 16. In other words, all the activities to activity O, inviting the media. Then, we fill in column H. This tells us how long they actually spent on each activity. Activity E, arranging the room, required an extra day to complete. And you can see, the light is red. This signifies that the difference is negative, in this case, by four hours.

Skip to 1 minute and 29 seconds We can now fill in the rest of the cells, apart from cell H12, that’s because activity I has not started yet. For activity O, inviting media, Rianne spent 16 hours, rather than the 12 hours that were planned. And the activity was still only half finished. From this, we know that the actual time taken will increase even further beyond what was budgeted for. Here, we record the time spent so far. This column shows the total actual cost of the staff assigned to a specific activity. This column shows the difference between the budgeted cost and the actual cost. Looking at this number, it is difficult to understand whether the difference is due to a higher rate or to more time spent.

Skip to 2 minutes and 15 seconds But by looking back at the previous columns, we can look for the red light. In this case, it is next to the time. Row 29 shows the total cost for the staff. This includes the budgeted costs, the actual costs, and the difference between them. You can see that it is still positive. This is because the project is not yet finished. In column O, we fill the actual costs for materials. In these cases, there was no differences between the budgeted and actual costs. As we can see, the totals for the materials are the same, so the difference is zero. Here, we record the cost of the equipment and other resources.

Skip to 2 minutes and 59 seconds The cost of printing the brochure is higher than expected, and so it shows as a variance from the budget. The total budget and the actual costs of equipment is reported here, along with the difference. The overall budget cost is compared with the actual cost, and the difference is displayed here. Once the project has ended, you can fill in the actual final sheet. Now, because all the activities are completed, it makes sense to take a look at these values. As you can see, the total actual cost of the project is higher than the budget cost by £420.

# Tracking project cost

This video shows how to track the cost of a project, using the company event project as an example.

Monitoring the actual use of resources (and how it differs from your budget) can ensure that you maintain good control of your project. For instance, in organising the company event, the preparation of the brochure could take one hour more than expected, or the cleaning could cost £20 per hour instead of the planned £15 per hour. It is important to track this information very carefully. Your budget may have enough contingency for a small overspend here or there. However, if too many items turn out to be more expensive than you budgeted for, you may not have enough budget overall to finish the project without making cuts elsewhere.

Consider monitoring the following for your project:

• For human resources, collect the actual hourly cost and the total number of hours they worked on each single project activity.
• If you track materials, you should take note of the quantity used and the unit price of each. Nevertheless, materials are often bought in lots, so you could just record their total costs.
• Finally, you may rent some equipment or a venue. You need to record the actual costs of these services.

You can download the example files used in the video (Gantt chart company event in progress and the record of the actual costs in the Budget file) below.