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Project Cost management

Extracts from this essay...

Introduction

UGANDA MANAGEMENT INSTITUTE Project Cost Management Course Work 11/8/2009 a) Organizations are faced with projects of various size and technical complexity. Ensuring the success of these projects is of paramount concern to the project manager. Project management can be defined as the application of formal and informal knowledge, skills, tools and techniques to develop a system that provides a desired level of functionality on time and within budget. The main objective of a project manager is to continuously improve overall productivity of the project by reducing cost and increasing benefits. In fulfilling this, the need for a more comprehensive management of cost and functionality becomes apparent in the strategy if the project is to be completed successfully and within budget. The means and ways a manager can use to ensure successful completion of projects within budget are embodied in the application of those formal and informal knowledge, skills, tool and techniques of project cost management. This requires careful analysis of the project portfolio to identify and understand what it is to be done, what capacity does exist to complete the work, and how much it cost to complete the project task. For the project to be successful, the project manager will need to understand what exactly constitute the project he/she is tasked to manage to successful completion and which criteria will be used to determine whether the project is successful or not. The first thing the project manager should do is to understand the characteristic of the project in detail and apply project management knowledge, skills and tools under his/her fingertips to ensure success: these characteristic would include: * A start and end date: The Project Manager need to understand when the project activities are to start and when they should end. * Resources: time, money, people and equipments to be used by the project. For example to produce a GBV brochure The Project Manager will need a team (designers, copywriters, coordinator etc); equipments (computers, printers, papers, delivery truck, etc)

Middle

The bottom line is greater accuracy and greater control over all the factors that make up the costs and can result into efficiency and effectiveness of completing the project within budget. Earned value management (EVM) The earned value management technique is a valuable tool to measure a project's progress, focus its completion date and final cost and provide schedule and budget variances along the way. EVM provides consistent indicators to evaluate and compare projects and give an objective measurement of how much work has been accomplished. It lets the project manager combine schedule performance and cost performance to answer the question: "what did we get for the money we spent?" Using EVM process, project manager can easily compare the planned amount of work with what has actually been completed, to determine if cost, schedule, and work accomplished are progressing as planned. It forces the project manager to plan, budget and schedule the work in a time-phased plan. Figure above shows: Monitoring the earned value using the S-curve The principle of ABC and EVM technique provide the project manager with an innovative cost and performance measurement system, allowing productivity improvements and therefore can enhance project profitability and performance. Quality management Many projects trade time for quality in delivering results and don't meet the quality objectives. Quality management cannot guarantee project success but it certainly provides a force against failure. The goal of effective quality management is to set realistic project and process quality objectives, define actionable quality expectations, ensure minimal product defects and eliminate rework which could push the project beyond its budget. In short, quality management is designed to help deliver the best project results within established constraints and boundaries. Several process improvement methodologies such as total quality management, quality circles and statistical process control can be applied but the six-sigma appears as the most relevant one. The fundamental objective of the six-sigma (i.e.

Conclusion

vision and goals are not well defined: Here are some possibilities to see that it does not hamper project implementation. Determine which parts of a project are not understood by the team and other project participants and ask them for feedback or note feedback and questions that come up. Check the project documentation as prepared and tighten up the stated objectives and goals. Each project is, ideally, tied into the direction, strategic goals, and vision for the whole organization, as part of the portfolio of projects for the organization. There are an infinite number of reasons why projects are challenged, but the solutions always seem to come back to one thing: good communication, which brings us to . . . Ineffective communication: To solve this, determine the communication, "whom," "what," "when," and "how," for each project. Find (or create) some templates for agendas, minutes, reports, and plans, and reuse them on every project. The outcome of each project is unique, but good communication should become a habit. Project change control: - To cope with changes use a formal change control procedure as follows: 1. When a project staff asks you for a change that will potentially impact the project, insist that the requestor submit the change request in writing using a change request template. 2. Review the impact of the change on the project in terms of cost, schedule, performance and outcome. Review also what will happen if you do not implement the change. 3. Accept or reject the change - depending on the importance of the change, you can involve the project team members and/or the project sponsor in making the decision. If the change has been rejected, inform the requestor and all concerned parties. 4. If the change has been accepted, document it, and update the project plan to take into account the change's impact on the project's schedule, budget and outcome. 5. Communicate the accepted change and its impact to the requestor and all concerned parties (include the change in the next project review meeting).

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