Managing the Business Project Textbook: Project Management: A Managerial Approach by Wiley (6th ed)
Chapter: Budgeting and Cost Estimation
General Ship Company
General Ship Company has been building nuclear destroyers for the Navy for the last 20 years. It has recently completed the design of a new class of nuclear destroyer and will be preparing a detailed budget to be followed during construction of the first destroyer.
The total budget for this first destroyer is $90 million. The controller feels the initial project cost estimate prepared by the planning department was too low because the waste and spoilage allowance was underestimated. Thus, she is concerned that there may be a large cost overrun on the project and wants to work closely with the project manager to control the costs.
Question: How would you monitor the costs of this project?