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Deepesh Rammoorthy
ICT Project Manager ( PMP®AgilePM®Certified ScrumMaster® (CSM®))| Australian Red Cross Blood Service
Tarneit, Vic, Australia
When you are scoping the project, You decompose the project work into Work Packages using a WBS .
After you have decomposed your WBS into individual Work Packages , Each one of the Work Packages contains a list of activities. For example, there is a work package that says "System Testing". This will be a work package that will be encompassing all the activities that a System Test Analyst is expected to do on the project . You might either choose to in-source or outsource the System Test Analyst. There is a cost associated to that resource per hour based on the number of hours that the system Test Analyst will be expected to work on .So you roll up the costs for all activities and come up with a figure , lets say $30,000 For three months of work for the Test Analyst. Then you can assign a contingency of lets say 10% or $3000 So the overall cost for that work-package will be $33,000 . This could be an individual Account or Line Item in your Finance System . Eg 2.2 - External Resource Now you may track the work being done and expenditure on this account through time sheets or other mechanisms and eventually your finance system will need to pay the invoice if it's external resource or you can pay for the resource from budget using an internal Departmental "Chargeback" mechanism. THis is the Control Account Put simply , it's a line item with a bucket of Money which you can use to track your project expenditure for an External Resource Mind you , a single Control account 2.2 External Resource can be used for any Number of Resources on Your Project who are External.You simply roll up all the costs and may end up with a control account of $100,000 with a Solution Architect and a Business Analyst as well. Or you can have another Control Account for "Business Analysis" Or "Professional services from another vendor" Your Finance Team should be able to guide you on how best to use Control accounts . From you as the PM, you only need to know that you need to track how much each of your resources is costing on the project The resources may not be human. It can be a Software License as well Individual Control accounts will add up to become your project budget You can apply contingency at 1) Activity Level 2) Work Package Level on the Control Account 3) Over all Budget Before you know how much money , you need the Scope and you need the schedule. Those two need to be inputs into Cost Management ...
1 reply by Ashwin Kumar H M
Feb 09, 2021 4:10 AM
Ashwin Kumar H M
...
Very nicely answered Deepesh
Thank you so much
Gary Hamilton
Bristol, Tn, USA
Deepesh - very detailed reponse.
Yes, it is a comprehensive answer.
Bala Sripada
Hyderabad, Ap, India
Deepesh,
Very nice explanation. Thank you very much as it is very clear. 
Khalid Nurain
Bloomington, Il, USA
Deepesh - Very detailed explanation.
Jun 14, 2017 1:57 AM
Replying to Deepesh Rammoorthy
...
When you are scoping the project, You decompose the project work into Work Packages using a WBS .After you have decomposed your WBS into individual Work Packages , Each one of the Work Packages contains a list of activities. For example, there is a work package that says "System Testing". This will be a work package that will be encompassing all the activities that a System Test Analyst is expected to do on the project . You might either choose to in-source or outsource the System Test Analyst. There is a cost associated to that resource per hour based on the number of hours that the system Test Analyst will be expected to work on .So you roll up the costs for all activities and come up with a figure , lets say $30,000 For three months of work for the Test Analyst. Then you can assign a contingency of lets say 10% or $3000 So the overall cost for that work-package will be $33,000 . This could be an individual Account or Line Item in your Finance System . Eg 2.2 - External Resource Now you may track the work being done and expenditure on this account through time sheets or other mechanisms and eventually your finance system will need to pay the invoice if it's external resource or you can pay for the resource from budget using an internal Departmental "Chargeback" mechanism. THis is the Control Account Put simply , it's a line item with a bucket of Money which you can use to track your project expenditure for an External Resource Mind you , a single Control account 2.2 External Resource can be used for any Number of Resources on Your Project who are External.You simply roll up all the costs and may end up with a control account of $100,000 with a Solution Architect and a Business Analyst as well. Or you can have another Control Account for "Business Analysis" Or "Professional services from another vendor" Your Finance Team should be able to guide you on how best to use Control accounts . From you as the PM, you only need to know that you need to track how much each of your resources is costing on the project The resources may not be human. It can be a Software License as well Individual Control accounts will add up to become your project budget You can apply contingency at 1) Activity Level 2) Work Package Level on the Control Account 3) Over all Budget Before you know how much money , you need the Scope and you need the schedule. Those two need to be inputs into Cost Management 
Mohammad,
to add to the good description of Deepash. Any box in the WBS is a WBS component, - a WBS component at the lowest level, and not further broken up and not yet having schedule information is a work package (WP) - a WBS component not yet defined and probably to be broken up is a planning element - a WBS component not on the lowest level and not a planning element may be designated control account (CA) Control accounts aggregate schedule, cost and other information from lower level work packages (or WBS components, which basically is the same). They are useful to limit the management efforts for controlling the performance to a few points in the WBS instead of each WBS component. For example with earned value and AC, you need to gather the actual cost for each control account, if you do not define those, you would need to gather AC for each WP (and setup the appropriate reporting structure in your timesheet system). So it is really a design point you need to make as a PM, balancing the need and the cost of insights and control. If you don't do anything with CAs, you only can check your performance on project level with EV.
Rajashekar Krishnaraj
Mogappair West, Tamil Nadu, India
Adding to Deepesh & Thomas...
See, In project management, a Control Account is a management control point where the scope, budget, and schedule are integrated and compared to the actual performance. It represents a level in the WBS where actual costs associated with the work are accumulated and compared to the budgeted cost (EVM comes in handy here). A Control Account is typically established at the lowest level of the WBS where a single organizational component (e.g. a department or team) is responsible for completing the work. Indeed It serves as a natural point for planning, monitoring, and controlling project performance. Example: Imagine a software company is working on developing a new mobile app. The entire project is broken down into smaller components using a Work Breakdown Structure (WBS). One of the main components or tasks in the WBS is "User Authentication Module." The "User Authentication Module" can be considered a Control Account within the larger project. It has the following attributes: Scope/Work Definition: This Control Account covers all the work related to developing the user authentication functionality, including login, registration, password reset, and security features. Budget: A specific budget of, say, $20,000 is allocated for this Control Account, which includes the cost of developers, testers, and any required tools or services. Schedule: A timeline is established for when the User Authentication Module should be started and completed, aligning with the overall project schedule. Responsible Person: A lead developer or team lead, let's call them Alex, is assigned as the Control Account Manager responsible for managing the work, budget, and schedule for the User Authentication Module. As the project progresses, the project manager will monitor the actual costs and progress made on the User Authentication Module against the planned budget and schedule. Any deviations, such as cost overruns or schedule delays, can be easily identified and addressed at the Control Account level with Alex. hope this clarifies... Raj- 
Certainly! The concept of control accounts is commonly used in project management and accounting, particularly in the context of cost control and financial reporting. Let's break it down in depth:
1. Definition: A control account is a summarized account in the general ledger that represents the total balance of a group of related subsidiary accounts. It serves as a central point of control and oversight for a particular category of transactions or activities within an organization. 2. Purpose: Control accounts are used to facilitate management oversight, financial reporting, and internal control. By consolidating related subsidiary accounts under a single control account, organizations can streamline the monitoring and analysis of specific areas of their operations. 3. Example: In project management, control accounts are commonly used to track and control costs. For example, in a construction project, there might be control accounts for labor costs, materials costs, equipment costs, and overhead costs. Each control account represents the total budget or actual expenditures for that category of costs. 4. Relationship with Subsidiary Accounts: Underneath each control account, there are subsidiary accounts that provide detailed information about individual transactions or components within that category. For instance, under the labor costs control account, there might be subsidiary accounts for different types of labor, such as carpentry, plumbing, and electrical work. 5. Control and Monitoring: Control accounts enable managers to monitor and control expenditures more effectively. By comparing the balances of control accounts to budgeted amounts or historical data, managers can identify variances and take corrective actions as needed to stay within budgetary constraints. 6. Integration with Financial Reporting: Control accounts play a crucial role in financial reporting, particularly in the preparation of balance sheets and income statements. The balances of control accounts are typically reported in financial statements to provide a summarized view of the organization's financial position and performance. 7. Internal Control and Audit Trail: Control accounts contribute to internal control by ensuring that transactions are properly recorded and categorized. They also facilitate audit trails, making it easier for auditors to trace transactions from the general ledger to their respective subsidiary accounts and supporting documentation. Overall, control accounts serve as a fundamental tool for organizing, monitoring, and reporting financial and operational information within an organization, enhancing transparency, accountability, and decision-making processes. Best Regards, Mohamed |
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