Actual Cost in Project Management

Actual Cost (AC) is a critical Key Performance Indicator (KPI) in Project Management. It represents the total costs incurred for the work performed during a specific time period.

Tracking Actual Cost is crucial for maintaining control over the project budget. It provides a real-time view of the expenditure, allowing project managers to compare actual spending against planned spending and make adjustments as needed.

Calculation of Actual Cost

The Actual Cost is the sum of all costs actually incurred in the completion of work during a specific period.

Here's a conceptual representation:

Actual Cost = Sum of all costs incurred for the work performed

In this formula:

• Sum of all costs incurred for the work performed refers to all the direct and indirect costs associated with the work completed in a specific period. It could include labor costs, material costs, overhead costs, and any other expenses directly tied to the project work.

By calculating and monitoring Actual Cost, project managers can make sure the project stays within budget. Furthermore, it serves as a critical input for other key performance metrics like Cost Variance and Cost Performance Index, helping to provide a comprehensive view of project performance.