Understanding the Metric:
The Budgeted Cost of Work Performed (BCWP), also known as Earned Value (EV), represents the value of work actually performed up to a specific date, based on the budgeted cost.
This metric is part of Earned Value Management (EVM) and is used to track project performance by comparing planned and actual progress.
Why Cost Control?
Cost control involves monitoring expenses, comparing actual performance with the budget, and taking corrective actions when needed.
BCWP is a core metric in cost control as it helps in determining whether a project is staying within budget.
Why Other Options Are Incorrect:
A. Resource planning: Focuses on allocating personnel, equipment, and materials but does not deal with financial performance.
B. Cost estimating: Involves predicting project costs before execution, but BCWP is used during the project, not during estimation.
C. Cost budgeting: Refers to setting a budget, whereas BCWP measures how much work has been performed relative to that budget.
IIA Standards and References:
IIA Standard 2120 – Risk Management: Internal auditors should assess cost control mechanisms to manage financial risks.
IIA Practice Guide: Auditing Capital Projects (2016): Emphasizes earned value management as a key cost control measure.
PMBOK Guide – Cost Management Knowledge Area: Highlights BCWP as a crucial tool for monitoring and controlling project costs.
