Project Management – Cost
Project management is an insightful analysis with a deep and careful planning of steps with controlled attempts for carrying out or a fulfillment of typically any significant task based achievement. Considering an example of; 1. Setting up a new retail outlet at large arena, basically expanding your business. 2. Construction related projects needing heavy capital intensive approach. 3. Implementation of a new technological system through a project. Project management starts up with emerging a project plan that is further branched to have essential and validation of the planned goals and objectives.
It is basically an identification of tasks and activities and how those goals can be attained, measurements and allocation of the capital required, and shaping finances and deadlines with proper timings for completion. It also incorporates the overall management and the execution of the project’s planning being done at inception, along with working and taking into operation the expected controls to ensure that there is true and exact point of meaningful information on performance related to the project preparation and all the methods of implementation along with improvement actions where necessary.
Any project starts up with five different major stages/steps with various titles as per its significance, including feasibility, definition (conceptualization),
Need essay sample on "Project Management – Cost"? We will write a custom essay sample specifically for you for only $13.90/page
In today’s world when we have a cost of everything to be assessed, same is the case with project mangers they also need more money because they have more cost attached with them and to their projects. To do a single task or performing a single objective we need to pull out its hidden and unhidden expenses out from all sources. Because, every deliverable and milestone to be achieved has a defined or undefined cost associated with its prospects and survival. Now the point is how to manage this Project Cost?
PROJECT COST MANAGEMENT: Attaining the deeper look of this discussion we have Project Cost in each and every field and perspective. Starting from Information Technology to wide and huge Construction projects it has numerous costs associated varying on complexity basis. It depends on the scenario that whether we have to purchase raw materials or cables and routers, whether shingles and cement or it could vary more on a large scale. At all times we have to buy some sort of equipments and accessories to conclude the planned task.
While, someone specifically from the project team only has to go ahead and carry out the cash making stuff to buy all those needs for project completion and achievement. Taking an example of concurrent engineering cycle of developmental projects which would be just only aggravating the problem showing up the increments by escalating the magnitude and number of departments and manpower implicated at any position in the expansion attempt (Soldano, 2002). For project completion funds are needed as per its costing regardless of scope or schedule point of consideration.
Not only technical requirements to be satisfied or affecting cost management for projects but also the labor and staff time management plays a pivotal role over here as this also has to be paid off from someone’s account. And if you don’t have complete and accurate estimation of resources to achieve an ending picture with accomplishment of all the steps planned in project planning. Then project completion as per the designated scope would be resulting in as a doomed project (Soldano, 2002). ESTIMATING THE VARIANCES:
For proper and accurate project costing we need to estimate our project requirements properly at the start of the project tenure only. In order to identify how much it will cost for each and every specific project we need to have proper estimation and targets, hence, it’s all about less variant estimations and properly achieving targets. It is true that predicting the final cost is very difficult because not at all time’s proper estimations can be done for all our resources, goals and objectives.
As predicting for future is not in our hands. Here the only finest option for better survival is creating a better estimate. A real estimation develops as project particulars come into information, and that is called ‘progressive elaboration’. Estimations whether on a small or large scale are always very wide-ranging as well as not focused whereas after getting accurate project deliverables we can easily and accurately define our estimates and that would lead towards a perfect project costing.
(Joseph Philips) For starting with this we need to have an acceptable range of variance, with proper assumptions and conditions in focus as in reality for example considering an exemplary figure of some estimation to construct a latest fashioned store targeting that the store will bear an expenditure of $250 thousands +/- 15%, which would have to be completed in just 45 days, giving out the assumption that it will be completed in the month of August.
Analyzing the variances ranges and clear estimation and assumptions for its accomplishment with a validity lead time would be the basis for project costing affecting its completion directly. Good quality of estimation would be presenting the most related and relevant piece of work to the stakeholder, exclusive of any secrets and misconceptions from stakeholders.
If there is any kind of discrepancy in values, statements and suppositions, or variance ranges to be set, it is much healthier and beneficial to talk about the related matters with concerned authorities’ right at the first point in time instead of delaying the matter with many things creating more problems for project implementation and accomplishment. CASE STUDY CONSIDERATION: Considering a construction related case study of developing countries specifically focusing on telecommunication sector.
Since, telecommunication projects need high level of capital inducements and which is very difficult in a developing country because they do not have enormous access of financial assets to satisfy their desired expansion and growth requirements. At first we need to identify the factors that are leading the cost to overrun preventing these projects to spend millions and billions of dollars on tasks to be completed. As we know that this sector is the platform for ICT networks and services, and considered as the sole medium for communication in this fast growing era of globalization.
In fact, every related and unrelated component of the fundamental privileges / commodities of life are reliant on telecommunication. Telecommunication sector is very vibrant and capital intensive too. Here in this study we are going to explore the reasons and causes in line for cost overrun in the advancement of telecom networking infrastructure in Nigeria. Its urgency need is more important to be considered for keeping up the pace for the advancement of the other parts of the financial as well as economical market.
For this project specifically research has been conducted in Nigeria. As per Morris and Hough (1987) research finding here are not matching and not relevant directly to developing countries since they have almost same multiple problems related to time and cost over running in these sectors. These results can easily be used for having a comprehensive analysis of other developmental projects; say as transportation, power & energy industry development, sanitation advancements, projects for expanding irrigation sector and lot more to be considered.
The aim of this research conducted in Nigeria, reveals the analyses of estimated variances in between initial and final cost estimates at the ending with the overall accomplishment of telecommunication infrastructure projects, observing the insight disparities in opinions of the three directly concerned organizations with this project. And these three organizations were of clients, consultants, and contractors specifically. From the provided writing and readings review on building structure project concerns it was done revolving around the five categories out of which forty two factors of cost exceeding were notified.
Since telecommunication projects are similar to other construction project that is why it is pretty much obvious estimate to notify cost overrun in telecommunication projects in the same way as it was there in other construction projects. Hence, that been the reason why we are using these 42 factors of 5 categories in the study of our telecommunication project. INFLUENCING FACTORS: Apart from staff time another factor that could cause the project a major down turn and cost over run is the availability and access of professional and skilled labor.
Presence of cumulative experience in construction related jobs is very necessary that one should have a command over other technical aspects also because it would also include civil construction (related to concrete and steel); tasks related to electrical and mechanical works also, which must be integrated with telecom knowledge and experience. This range of experience professionals could give a proper and better estimate of cost variances factors between initial estimate and final cost.
Coming to other aspects (factors) causing discrepancy in between the initial and final cost in telecommunication projects are discussed down here revolving around five major categories that could affect the project’s variability. These considered aspects starts from environment considerations then goes on to construction related aspects. Then moving ahead towards factors related to construction equipments and mechanisms whereas cost estimating and financing factors are to be considered as well.
Elaborating on environment related factors, as per our analysis they would be affected by economic stability at the most then further due to inadequate production and supply of raw materials by the country/ supplier and then by definitely by government policies and procedures, rules and regulations also. Considering the construction related factor we would say that there are sub factors for lack of contractor’s experience, incorrect planning at the end of project manager as well as contractor plus a poor view of financial control on site are very important. These factors rank highly important as in accordance as they are listed here.
Another dominant factor could be the variable cost overrun causing frequent design changes under construction item factors. Under this category project manager should also analyze that if there are no fraudulent practices and kickback prevailing within their domain. Considering the cost estimating factors in which highly influential and affecting would be the cost of materials, and then comes the fluctuation of prices of materials as well as sky-scraping interest percentages implicated by financial institutions and banks on loans acknowledged by service providers (contractors) would also be included in the consideration list.
COST AND TIME MANAGEMENT: Effective project management can lead to wonderful and awesome reduction in cost and time for project completion. Although no doubt it is very true and well said that it would be more difficult to diminish or manage the project’s pace of activities and expenditure for a more developed and complex structure of a project. These continuous increments could lead badly towards breakdowns effecting directly on schedule lengthening the estimated completion of the project.
As well as also doubling or tripling the development cost while effective project management procedures and steps undertaken can save the lives of many projects with worse conditions. These worse situations can be tackled by implementation of proven project management systems and procedures. No doubt its application by remarkably well known organizations, involved in complex development works, have proficiently diminish their time and cost of these projects by applying project management methods and procedures in short making up huge profits on defined deadlines.
In success of every project there used to be the proper allocation of time and task to the appropriate people having those desired skills. Any mislead in resource allocation whether staff allocation, material or time allocation could lead to a bad disastrous condition. DIRECT AND INDIRECT PROPORTIONALITY: Since, we have read and study a lot about how improper staff time allocation as per not meeting the guidelines of the project proposal would not give the exact and accurate results at the given time.
Likewise, there comes different relationships between time and other varied cost trade-offs. There exist a direct and an indirect proportion of time and costs trade-offs. And these are the only two types of costs which through proper monitoring and execution can give us most favorable project outcomes at nominal cost on the whole. By working more deeply on the time-cost correlation, it is more easy and straightforward approach to guess the impact of a slight or abrupt time change on project costing.
Elaborating further on direct and indirect expenditure we can say that cost directly affecting the project pace of activities and tasks accomplishment, either it could be salaries, traveling expenses, or direct project equipment and supplies. In order to accelerate the pace direct cost will be increased for getting in more resources and manpower to decrease the time span of project completion. Whereas, indirect costs are all overhead expenses, those not to have anything with specific project activity. It would be expenses related to office place, working staff (administration), and all sorts of taxation.
Such expenses seem to be comparatively fixed as per unit of time over the life of the project because they have mutually been on set agreements. Else in the end by decreasing the project‘s time span these indirect expenses will be reduced. Thus, in order to reduce the direct and indirect costing we have to show a reduction in pace of activities referring to the crashing down or compressing the project schedule. In short reducing the time allocated for paces of activities referring to the increase of velocity for project activities for ending the project as early as possible.
Critical Path would play a great role here in determining the appropriate time for the completion of each significant task. Project Cost versus Duration It should be very well attended that whatever critical path shows, project managers should make sure that it sticks to that path only from and till the end of all activities even after the reduction of time in critical path activities. If more some amendments made in the project’ conducting procedures followed by a new critical path, it must replicate on the following point in time reductions specifically on each activity as described in the project manual.
To reduce the price rate efficiently such activities that are not costing as much higher for the ending and accomplishment of project’s objectives should be extended on the critical path for minimizing their costs without escalating the project ending time. CONCLUSION: In the end I would say that there are additional considerations also other than Project Cost only. It could be any sort of advancement or expansion of a novel creation, timing as when we have to market that specific project, that is time-to-market may be extremely significant.
This timing would play a vital role for accelerating the project activities so that its cost could become evidently greater than its minimal cost. Although, in contract work environment, there may be incremental payments or penalties connected with the stated project status in hand which could be of positive or negative view associated with early or late finishing point. Indirect costs will reveal many incentives as well as penalties also by critical adoption of time-cost model. REFERENCES: Ameh1, O. J. , Soyingbe, A.
A. , and Odusami, K. T. (2010). ‘Significant Factors Causing Cost Overruns In Telecommunication Projects In Nigeria’. Journal of Construction in Developing Countries, Vol. 15(2010, Department of Building, University of Lagos, Akoka, [Accessed July 19 2010] Information Management, (2005). ‘Managing Project Quality: Cost, Control and Justification’. Information Management Special Reports, Source Media, October 2005, Available from http://www. information-management. com/specialreports/20051025/1040055-1. html?
zkPrintable=true [Accessed July 19 2010] Net MBA. com, (n. d. ), ‘Time cost – trade offs’. NetMBA. com. Internet Center for Management and Business Administration, Inc. Available from http://www. netmba. com/operations/project/time-cost/ [Accessed July 19 2010] Omion, E. , (2007). ‘Factors that Contributes to Cost of Building Projects in Nigeria’. Ezine Articeles. com, Available from http://EzineArticles. com/? expert=Emmanuel_Omion [Accessed July 19 2010] Phillips, J. (n. d. ), ‘Project Cost Management’. Project Smart. co. uk, Available from