Do You Really Need That Cost Code?

Project Cost Code Planning – such a love/hate relationship we have with cost codes.  Project controls professionals can spend endless hours discussing, debating and tweaking the required codes for their project.  Understandably so, as there can be so many layers of complexity of how to design the right code structure.

We get many questions from companies about what code structure is the right structure for them, and we spend a great deal of time working with them to help define it.  We often get asked if there’s a standard coding structure they can just lift from some standards body and simply use it. Or if we have one they can use, or what do other companies use, etc.  Unfortunately, there’s no single source where a robust project-level code of accounts is fully defined for public or paid-for access for every industry.  There are, however, some standards and samples that have been defined for a variety of industries published by, for example, the AACE (http://www.aacei.org/) and CSI (http://www.csinet.org) which can provide you a significant jump on defining the system that best fits your business.  You’ll need to be a member, but well worth it. Here are a few teasers that give you the idea:

1. http://www.aacei.org/toc/toc_20R-98.pdf
2. www.aacei.org/toc/toc_21R-98.pdf
3. http://fire.nist.gov/bfrlpubs/build99/PDF/b99080.pdf

It hurts me to tell you this, but beyond resources like that, you’re likely going to have to bear down, get into it, and define your own coding structure. However, I do have some good news for you.  If you’re using a cost management system, your coding efforts can be significantly simplified. And that’s because a software system that understands concepts like a Cost Breakdown Structure, Resource Codes, Discipline Codes, Material Codes, etc. – can do a tremendous amount of heavy-lifting for you and make your life far far simpler; and give you much more rich reporting. In other words: Less work, better results.

When we see, for example, project controls professionals designing a cost breakdown structure that’s overly complex with 4-or-more levels of coding, we ask, “Do you really need that code?” The typical reason that project controls guys want to define multi-layered coding for their projects, is that they’ve for so long been working in an Excel world where everything is very manual. With a Cost Management system, the software has powerful logic and a big fat relational database to automatically make thousands of connections between any data element entered into the system.

The advantage, is that all your coding can be configured ahead of time, and the system takes care of the rest. For example, you can setup all your:

• Material Codes
• Discipline Codes
• Activity Codes
• Project Codes
• Vendor Codes
• Etc.

… in the master configuration area. Then, all your Budgets, Tracking, Procurement, Reporting, etc. all utilize these pre-configured codes, and the system connects the dots between them. As a result, you can slack off on how many levels of coding you define in your CBS, because the system will automatically connect, for example, the activity code, with the material code, and the project code, and the phase code, and the Tag Number, and location identifier, and the budget code, and the vendor document number, and on and on and on. There is sooo much data collected for every single action, that you can dream up endless ways to report on that data for truly rich and powerful planning & execution of your projects.