Project Cost Management
Project cost management (PCM) is the process of which technology is used to measure an approximate estimate of funds and resources needed, in order to complete the assignment within an approved budget. Although, most companies use some form of project cost management, it is often disregarded or unacknowledged regarding the importance of this treasured tool. For instance, if a project manager (PM) does not use a cost management tool, then there is a great change the task will be behind schedule and over budget (Schwalbe, 2011).
Nevertheless, if I were tasked to prepare a cost estimate for my university in order to provide everyone an Apple or Microsoft tablet, then it would definitely be advantageous to start the estimating process
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For example, I would not purchase a cheaper tablet if it did not have a good battery life, decent amount of memory, a larger screen, printing capacity, or the ability to web surf. This is why it is a great idea to use all the required information in order to come up with a good cost estimate.
Therefore, I will need to use the following types of cost estimate documents, in order to start this tedious yet important process. First, I would use a rough order of magnitude (ROM) estimate especially since it will provide an approximation of the project cost. This is a great document to use very early in the project, in order to create a project selection decision (Schwalbe, 2011).
Although, a ROM typically has a ratio of -50 to +100% of accuracy, it is still the best method in order to guesstimate the projects actual cost, this early in the project. For example, a project can have either a 50% below or 100% above the ROM estimate. In non-technical language, this means the venture could cost less or more than the expected project cost (Schwalbe,
to me but this is a rough estimate of what the final cost may be.
Gray, C., Larson, E. (2008). Project Management: The managerial Process. New York, NY: The McGraw-Hill Companies Inc.
Information retrieval could be expanded to the two alternative products: Samsung and Galaxy Nexus. Therefore, as a part of my decision-making process, I would have to use the evaluative criteria, which refers to the products, the recognition of its functions, features, attributes, and benefits of use. The features and characteristics that best meet my needs would be design, price, size, color, durability, life of the battery, service, etc. For example, Apple has long been practiced using a bunch of aluminum and glass through which almost all of their products look great. In addition, aluminum is very practical and does not show fingerprints. Galaxy Nexus has the smallest screen size. The tablet can be ideal companion for watching video and reading books. Samsung tab has the best size and weight to all comparable models. All of the suppliers of the tablets provide with a maintenance services, returned-goods policies, financing and many other services for the
Decision tree approach: This approach is suitable for projects that do not have to be funded all at one time. The alternatives, probability of payoffs are identified using diagrams which are simple to understand and interpret with brief explanation giving important insights. It identifies managerial flexibility to reevaluate decisions using new information and then either invest additional funds or terminate the project.
Kim, B. &. (2011). Combination of project cost forecasts in earned value management. Journal Of Construction Engineering & Management, 958-966.
At the beginning of any project, a project manager along with the management team will create an estimate of time and costs, which will lead to the initial approved budget amount. As most project managers know, "Past experience is a good starting point for developing team and cost estimates.
...bine it into the price for equipment rentals and labor. The grand total of these figures is the cost of the job, if we price under that number, we lose money. So, careful judgment is used to decide how much profit a job should bring in. We then decide how much over the total cost we want to charge, we type up an official, detailed quote for the job. If the contractor is happy with the price, he will accept our bid and we now have the job. Now all that’s left to do in this stage is to get all the permits and draw up the necessary contracts.
Software development project managers should prepare several types of cost estimates for most projects. Three basic types of estimates include a rough order of magnitude or ROM, a budgetary estimate, and a definitive estimate.
To test the financial feasibility and plan acceptability, there must be information on the magnitude, and share of estimated project cost that are reimbursable. This information can be derived from cost allocation. Also where cost sharing is required in the multipurpose planning process cost allocation can be applied. Cost allocation also provides information necessary for allocating the real expenditures ensuring that the cost account are maintained in line with plan formulation and allocation principles during the subsequent c...
Project management is said to be completed within time when it completed within the “triple constraints”: cost, time and quality. And in a lot of causes, one them is sacrificed so as to meet the other two. Project managers prioritize which ones are the most important.
Accurately forecasting the cost of projects is vital to the survival of any business or organization. Cost estimators develop the cost information that business owners or managers, professional design team members, and construction contractors need to make budgetary and feasibility determinations. From an Owner's perspective the cost estimate may be used to determine the project scope or whether the project should proceed. According to the U.S. Department of Labor there were about 198,000 cost estimators in 1994. That of which 58% work in the construction industry, 17% employed in manufacturing industries, and the remaining 25% elsewhere. From this we could conclude that a great deal of cost estimation lies in the construction industry, where multi-million dollar contracts are formed after a thorough cost estimation.
Estimates form the basis of tender comparison, so it should be as accurate as possible, if deficient the award settlement becomes arduous (Odusami & Onukwube, 2008). Accurate cost estimate for projects are tremendously essential to both the clients and the contractor. It provides the basis for the contractor to submit the tender and allows the parties to highlight the final cost of the project at an early stage. Essentially it is used for planning the entire project and helps during the execution phase (Akintoye and Fitzgerald, 2000). It has been pointed out that the building cost of the project usually differs from the estimated final cost and this is due to the variations (Oberlender and Trost,
When planning a new project, how the project will be managed is one of the most important factors. The importance of a managers will determine the success of the project. The success of the project will be determined by how well it is managed. Project management is referred to as the discipline that entails the processes of carefully planning, organizing, controlling, and motivating the organization resources so as to foster and facilitate the achievement of specific established and desired goals and meet the specific criteria of success required in the organization (Larson, 2014). Over the course of this paper I will be discussing and analyzing the importance of project management.
Project planning falls in the Planning Process Group which consists of those processes to establish the projects total scope, define the projects objectives, and courses of action to achieve those objectives. During the planning process, all the documents that are needed to carry the project through the project lifecycle will be developed such as the project management plan. Project management requires repeated feedback loops as additional information becomes available and is better understood. The planning process delineates the strategy, tactics, and path to successfully complete the project. With that, the planning of a project must walk through all the those processes from executing, monitoring and controlling through the closing process.
Project management involves all activities that encompass scheduling, planning, and controlling projects. A successful project manager ensure that an organization’s resources are being used both efficiently and effectively. Most projects need to be uniquely developed require a sense of customization and the ability to adapt to any posed challenges. The scope of effective project management includes defining what the project is and what is being expected to be accomplished. Projects are imposed to fulfill a certain need and project managers must have the ability to create the proper definition. Goals and the means used to attain those goals have to be clearly stated. Project Managers must also have the ability to plan