Project Management Institute

The elusive budgeted cost of work performed for research and development projects

Budgeted cost of work performed (BCWP) can function--theoretically, at least--as a powerful tool for making budget forecasts. But although it plays an important role in monitoring the cost of work packages, BCWP cannot help project managers control costs. Only when project managers use BCWP in relation to a work breakdown structure (WBS) and the actual cost of work performed (ACWP) can they effectively control costs, especially on high-risk projects within the research and development (R&D) field. This paper examines different cost control approaches that project managers can use in relation to the BCWP to effectively forecast and evaluate the costs of R&D projects, approaches such as subjective evaluation, percentage approach, and milestones approach. It also describes the cost control impact of the weighted average of work items.
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