What is meant by cost tracking?

Effective cost tracking is usually an essential part of project management. In order to use the planned project budget efficiently, precise cost tracking is extremely important. This includes the monitoring and control of financial transactions. As part of cost control and tracking, planned and actual expenditures are continuously compared to ensure they are in line with cost targets. If deviations from the targets occur, the responsibility of cost tracking is to intervene in the process and make appropriate adjustments.

In projects, cost tracking is usually closely linked to the progress of the project. Target costs play a key role in this process. In order to determine the target costs, it is necessary for project controlling to accurately record the current project status. The costs for tasks that have already been completed can be easily determined and are added up. For ongoing tasks, progress must be evaluated in relation to planned costs, with the risk of misestimates, especially if schedule forecasts are too optimistic. For tasks not yet started, the original estimated costs apply, unless there have been changes in influencing factors during the project period.

In addition to target costs, residual costs are an important factor in continuous cost tracking. However, residual costs are not determined simply by subtracting the target costs from the calculated costs. A proven method is to value all tasks not yet fully completed at the planned costs, provided there are no variances.