What is Kaizen? – The 5 S Approach
“Kaizen” refers to a Japanese word which means “improvement” or “change for the better”. Kaizen is defined as a continuous effort by each and every employee (from the CEO to field staff) to ensure improvement of all processes and systems of a particular organization. Work for a Japanese company and you would soon realize how […]
What is Scatter Plot ?
A scatter plot is a graphical tool. It has been designed to ensure that it provides a convenient view of the process to the manager at a single glance. The scatter plot studies the correlation between the important variables. When it studies the correlation between two variables, it is called a bivariate scatter plot. When […]
Managing the Millennials: Some Approaches
Who are the Millennials and Why are they so Important ? The Millennials or the generation of youngsters born between 1980 and 1995 and so called because of they came of age in the New Millennium is now either entering the workforce or are already part of it. This means that organizations, governments, and managers […]
What are Trade Wars and How Do They Affect Economies, Businesses, and Individuals?
In recent months, there has been much coverage in the business press as well as the general press about Trade Wars between the United States and China as well as between the United States and the European Union and Canada and Mexico. The immediate trigger or the event for these trade wars has been the […]
Drug Counterfeiting in India
The Indian pharmaceutical market is huge, and drugs worth billions of dollars are manufactured and sold every year in India. Some of these drugs are sold locally, and some are exported abroad. India is the fourth largest pharmaceutical market in the world whereas it is also the largest exporter of pharmaceutical drugs worldwide. This rapidly […]
The following are the costs associated with the projects.
Any costs that are directly attributable to the work on the project. These can include the salaries paid to the resources, the billing rate of the resources and costs of the software and hardware that are used for building the website
These costs are spread out against many projects and cannot be linked to one project alone. These costs include those incurred in shared services like cost of office space, taxes paid by the organization and other services like secretarial and janitorial staff
Costs that change in proportion to the amount of time and material that are spent on produced in the project.
Costs that do not change with the timeline or progress of the project.
A cost be either Fixed or Variable; Direct or Indirect
The overhead costs for this project are the office setup and shared services. While the costs incurred in setting up the office space can be general overhead cost as it is a one-time cost and is borne by all the projects in the organization.
The project overhead costs are the costs incurred in the shared services such as secretarial staff and other services provide to the project and can be directly billable as such.
A time phased budget would include the costs incurred at each interval or milestone of the project. The milestones for this project would be requirements, design, coding, testing and implementation. The budget for the same would be the costs at each stage of the project.
The Budget at Completion or BAC should have all the components of the costs included like direct and indirect costs, fixed and variable costs etc along with the cost at each phase or milestone of the project.
The cost variance should be measured using Earned Value technique and this tool allows the manager to assess the completion of the project at each milestone according to the cost incurred and the value accrued till then. Variance between these two measures gives an accurate estimate of the health of the project.
The cumulative costs of the project are the ones that are incurred up to a specific phase or milestone of the project. It can be measured by using a Cost Performance Index or CPI which measures the ratio of the Earned value with regards to the Actual cost incurred on the project. As outlined above, all the costs that accumulate up to a particular phase can be called the cumulative costs of the project.
The cost management plan should include the plan for controlling the costs of the project. There should be a measurement of the costs involved and their variances tracked, if any. Any variance to the budget must be controlled by the controlling the impact of the cost changes.
Further, cost control can be done in the area of overhead costs and general and administrative expenses.
Your email address will not be published. Required fields are marked *
