Control Of Project Cash Flows From Pome By Gautam
Koppala
Author: GAUTAM KOPPALA
Control of Project Cash Flows
The development of information for the control of project costs with respect to the various functional activities appearing in the project
budget. Project managers also are involved with assessment of the overall status of the project, including the status of activities,
financing, payments and receipts. These various items comprise the project and financing cash flows described in earlier POME
Chapters. These components include costs incurred (as described above), billings and receipts for billings to End Users (for
contractors), payable amounts to suppliers and contractors, financing plan cash flows (for bonds or other financial instruments), etc.
Other short-term assets, including marketable securities, accounts receivable, inventory, and prepaid expenses, are part of the Project's
cash flow. The rest of POME describes the management issues for each of these assets.
As an example of cash flow control, consider the report shown in Table below. In this case, costs are not divided into functional
categories, such as labor, material, or equipment. Table below represents a summary of the project status as viewed from different
components of the accounting system. Thus, the aggregation of different kinds of cost exposure or cost commitment shown in Table
12-0 has not been performed. The elements in Table below include:
Costs
This is a summary of charges as reflected by the job cost accounts, including expenditures and estimated costs. This row provides
an aggregate summary of the detailed activity cost information For this example, the total costs as of July 2 (7/02) were $
8,754,516, and the original cost estimate was $65,863,092, so the approximate percentage complete was 8,754,516/65,863,092
or 13.292%. However, the project manager now projects a cost of $66,545,263 for the project, representing an increase of
$682,171 over the original estimate. This new estimate would reflect the actual percentage of w