Maintenance Policy and Repair – Need and its Importance
Introduction Plant and machinery in the initial days always perform to their fullest capacity but as time goes with regular wear and tear, this becomes increasingly difficult. If proper and regular maintenance is undertaken than production capacity can be maintained at a more or less same level. Maintenance also requires replacement decisions. Replacement is a […]
The Global Economic Crisis and its Impact on India
Much has been written about the way in which India was one of the few countries that was relatively unscathed because of the global economic crisis. Most of these narratives focused on how India managed to weather the storm in the dark days following the collapse of Lehmann Brothers. However, it cannot be completely said […]
Banning of Unregulated Deposits in India
The Indian government has been facing several cases of fraud every year. There are many chit-fund schemes like the Saradha scheme which have been used to dupe thousands of retail investors to the tune of crores of rupees. After facing severe criticism from the public for the inaction of the government to stop such schemes […]
Recording the Inputs (Xs) at Actionable Level
The 5 why method or the Root Cause analysis method that has been described in the Tools section plays an important role in determining that the X’s are recorded at actionable level. In this implementation of the 5 why tool, there is a slight variation from the standard methodology and hence it has been explained […]
3PL Contract Logistics Operations
While Freight Forwarding is an important function of 3PL Service providers to facilitate the Supply Chain, another equally important function managed by 3PL Logistics Companies is Contract Logistics. Under the broad umbrella of Contract Logistics, 3PL providers provide services of setting up consolidation centers, distribution centers, warehouses and inventory management services. European network of transportation […]
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.
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