AAOM Handbook

WA.09 Establish Upper Cost Limit Context

The review process for a Work Request has so far established a scope of work technically suitable to the sustainable (i.e. dealing responsibly with safety, the environment, employees, communities, governments and asset life), effective and efficient performance of a business area. However, these outcomes must be achieved at a cost that the business area can sustain. Therefore, as part of the approval process, an assessment must be made whether:  Funds are available in the budget,  The funds are available for commitment, or  There are lower cost alternatives for achieving the same outcomes, or  Other work may need to be deleted from the budget, modified or deferred to make funds available for this work, and  Any potential hazards and risks related to amendments of the budget activities are adequately addressed. A cost estimate produced at this stage of the approval process will form the approved Upper Cost (expenditure) Limit for all future stages of the Work Order life. Note; if the cost appears likely to exceed this value at any future stage of the Work Order life, the issue must be referred back to the Work Approval process. Purpose To provide an Upper Cost Limit for work management decisions. Quantity One upper cost limit entered for each necessary and appropriate Work Request. Quality The cost estimates are to include all costs to complete the Work Request. Total cost to include:  Labour  Materials  Specialty tools  Internal services  External services This task must be completed by a person with the appropriate technical expertise. The upper cost limit for the work will be recorded in the Work Order.