1.0 Introduction
1.1 Background
The concept of projects has been in existence since the building of the Pyramids, Great Wall of China, Taj Mahal and many other initiatives which would have been completed in the earlier centuries. Projects are said to be temporary endeavours undertaken to create a unique product, service or result ((PMI) 2013). The project management profession has developed over the last 30 to 40 years (Weaver, A Brief History of Project Management 2007). There have been many emerging processes and principles to guide and coach project managers in the successful management of projects.
One of the modern principles of managing a successful project is the Iron Triangle which was developed by Dr Martin Barnes in 1969 (Weaver,
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To determine how these cost overruns could have been avoided, an assessment of the cost management approach and the various tools and techniques would need to be explored.
Many cost management tools and techniques have been developed over the years. These assist the project management team to accurately estimate and management cost throughout a project’s lifecycle using various tool and techniques. Throughout the course of this paper, we will look at a particular framework called Total Cost Management and determine whether it can in fact alleviate the issue of cost overruns in projects. The idea of Total Cost Management being the key to any project’s success will be looked at and the validity of this statement proved.
1.2
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There are different perspectives and variations on the definitions of TCM. However, there is a common understanding of its purpose and application towards a project or particular endeavour. For instance, one definition speaks of TCM as an effective application of professional and technical expertise to plan and control resources, costs, profitability and risks. It is a systematic approach to managing cost throughout the life cycle of any project, product or service (AACE International 2012). AACE International extends TCM further to the cost management of any enterprise, programme or
Cost management plays a major role when maintaining profit margins. Management must be able to find in which areas of a business costs must be reduced and the consequences that such reductions have in the overall company. In some situations management must change the way the work is being done in order to decrease costs while in other cases changing one supplier for another might be enough, in both situations a tradeoff will occur and the consequences will impact the company as a whole.
Therefore, we will expound and clarify below. Management Analysis Capital Expenditure On the surface, making sure a project measures up to a range of consistent, prescribed criteria in order to be accepted would appear to be a sound business practice. But in our opinion, we think DC only focused on the financial management. We think they should utilize the strategy map strategy.
It is observed that finding out the technique that can be utilized to manage the cost lifecycle of the project. There is a high probability that cost management are conducted better result can be obtained.
Wulke, R., & Kohl, B. (2004). Cost Management: Roadmap to Project Success -Supplementing Accounting Systems for Project Cost Management. Cost Engineering, 46(8), 11-13. Retrieved from: http://eds.a.ebscohost.com.ezproxy.chadronstatelibrary.com/ehost/pdfviewer/pdfviewer?sid=1dccb277-c3b2-466f-8b9f-d0549574afa8%40sessionmgr4002&vid=5&hid=4205
3. What were the unintended consequences of using the project management tools? What lessons should Teradyne take away from the Jaguar project?
The projects in today’s world are given a lot of importance and it will continue to grow in the coming years. There are a lot of companies which do not have production, but all of them do have projects. There are a lot of books which have been published on which related to planning and managing the projects. The one of the most important one was published by the author Eli Goldratt in his book ‘Critical chain’. This book basically talks and shows how the application of theory of constraints in the field of project management. The novel is basically based on one of the MBA classes in America where a number of ideas are developed in discussions among the students and the lecturers. The lecturer is basically fighting for a tenure with the president of the university who expects a downturn in the executive MBA. The lecturer who teaches project management has a word with one the senior colleagues and project management was the right topic to teach. There were three students who were placed in the project management team of their company which manufactures electronic products. The students are enrolled in this MBA class along with other students, here they discover a new approach to project management which is known as the
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data
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...
What are the key elements in Reson’s new approach to project management, and in your opinion, which are the most important?
In the globalized economy, Successful project managers are in much demand across many industries. Organizations strongly need experienced project managers to lead their staff to accomplish their business goals and deliver successful projects. In an increasingly complex environment, project managers need to turn into many roles and have all kinds of responsibilities at each level of management within an organization. Good project managers are not born. They need to be trained. They develop their skills through study, practise and experience. They become better project managers after they finish a successful project each time. They learn new techniques and apply them on their projects. They learn their lessons from failed projects and then improve to be better project managers in the future.
Time-phased project work is the basis for project cost control. Work package duration is used to develop the project network. Further, the time-phased budgets for work packages are timetabled to establish fiscal measures for each phase throughout the project. The time-phased budgets are to emulate the real cash needs of the budget, which will be used for project cost control. This information is useful to estimate cash outflows. The project manager's attention is on when the costs are to occur, when the budgeted cost is earned, and when the actual cost materializes. This information is made up to measure project schedule and cost variances (Gray & Larson, 2005). The following are typical types of costs found in a project:
Thanks to this approach the project manager is able to control the project from start till finish through the multiple evaluation and decision moments. Numerous processes are described like how to handle deviations and the various communication channels between the project members, the project and all the stakeholders.
The typical triangle with three interdependent variables, cost, time and scope, must include another important constraint operating in every project: Quality. This constraint should be analyzed in two ways, product and process quality (Wysocki, 2014). A project could be delivered in time, meeting cost and scope, however, it might to fail to comply quality standards (Schwalbe, 2014). The process of balancing project constrains includes the followings, but are not limited to: Scope, Quality, Schedule, Budget, Resources and risks (PMI, 2013).
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 management is the application of knowledge, skills, tools, and techniques to organisational and project activities to achieve the aims of an organisation through projects” (PMI, 2003).