Project Cost Management Techniques Samples †MyAssignmenthelp.com

Question: Discuss about the Project Cost Management Techniques. Answer: Introduction The report relates us to the topic of cost management involved in managing the cost required for the setup of a new call center. It helps the various business in predicting various expenses in an organization which will ultimate reduce their risk of going over the budget. Reducing the cost involved in a project can be achieved by increasing hiring, coaching and lastly better training of staff members, keeping an eye on the action or activities of various agents, improving the resolution of first call, Improving the schedule of cost and reducing or minimizing the cost of attrition. Various responsibilities which are involved for applying proper techniques for the development of new call center for large organization. Various factors like budget, monitoring expenditure, finalizing of cost, improvements which are involved in this project cost management has been discussed in details. Budget of a project mainly depends on following parameters like labor, materials, equipment, services and facilities. Cost control of project mainly comprises of following things like meeting of targets, progression as planned, cost as planned. Budgeting of project mainly comprises of following parameters like baseline of the cost involved in project. Project cost management consist of various process which mainly checks that the given project is completed in given time. It mainly helps in ensuring that the given project is completed within project. Budget Budget mainly involves development of an approximation or estimation of cost of resources which are needed for completion of various project activities. Cost Budgeting generally comprises of overall estimation of cost involved in project which will help in establishing a baseline for measuring the performance of various project. Inputs required for cost Budgeting: There are certain tools involved in cost budgeting that are estimation of cost, Work breakdown structure, schedule of project. It helps in estimation of cost of various resources like hardware, software, development of team salaries, training, operation labor which are involved in a project has been discussed in details. It can be present in summary or in details (McNeil, Frey and Embrechts., 2015). Scheduling of project is inclusive of planned start and proper finished dates for a project. Tools for cost Budgeting: Tools and techniques are considered to be mandatory for project development and estimation of cost and development of budget of various work items involved in a project (Meng., 2012). There are certain tools like Analog estimation, parametric modelling, Bottom-up estimation, tools for computerized, bottom up estimation, computerized tools. Analog estimation: Analog estimation is also known as top down estimation which means the cost of a previous project is compared with the present cost of project that is the implementation of new call center in a large firm. This method is generally less expensive than other method or techniques. Parametric Modelling: Parametric modelling consist of various parameters of project in a mathematical model which helps in analyzing the involved cost of this project that is the implementation of new call center. Models can be simple or complex as per the needs it is used accordingly. This model depends on various parameters like accurate information, various parameters used are quantifiable and lastly it should be flexible that is it can work for large project as well as for small project. Bottom- up estimation: Techniques which are involved in estimation of specific and individual work items and then adding the individual items for the various cost involved in a project. Computerized Tools: Various software tools likeproject management software and spreadsheets are widely used for analyzing and estimation of cost (Schwalbe, 2015). Theses software products can help in simplifying the use of tools involved in the project. Outputs of cost Budgeting: Cost budgeting helps in analyzing the cost baseline of a project. In this project that is the implementation of a new call center in an organization cost baseline is a time phased budget which will help in measuring and controlling the performance of cost involved in a project (Mir and Pinnington., 2014). It is developed by the help of estimation of cost and displaying it in the form of S curve. Monitoring Cost management Cost management generally comprises of following factors like changes in the cost of baseline to check for changes which can be beneficial for a firm and it also helps in analyzing the bassline of cost involved in a project and also managing the changes which can occur in a project like implementation of new call center in an organization. It generally comprises of four factors that are: Analyzation of performance of cost to checking the plan. Checking the various changes as recorded in the baseline of the cost involved. It prevents incorrect and unauthorized changes being implanted in the cost baseline. Altering the various involved stakeholders about the authorized changes. Inputs to cost controlling There are generally four parameters involved in it and this are cost baseline, performance report, change request and lastly cost management plan. Report of performance: It helps in analyzing information on performance of cost like the budget which has successfully completed and which has not been successfully completed (Reiss., 2013). This report can beneficial to project team to tackle problem which can arise in future. Change in request: Change in request may in many forms which can be oral or written, direct or indirect, external or internal which can be legally mandated or optional. Changes may be considered to be important for increasing the budget or decreasing it. Cost management plan: This plan describes how the variances in cost can be managed. A cost management can be formal or informal which can have details on the various requirements of the project. Tools and methods for cost controlling Change in cost control system: This system generally defines the various methods by which the cost baseline can be easily changed. It is inclusive of paperwork, tracking systems and approval levels. Cost change control system should be added with the overall change control system. Measurement of performance: This technique is very useful in controlling the cost involved in a project. Additional Planning: Generally, few project run according to the plan and changes may be required. Changes may be need new or update value of estimation of cost involved in a project. Computerized Tool: Various software equipments likeproject management software or spreadsheet can be considered to be beneficial for keeping a track of expected cost vs real cost and keeping a track of various effects of changes involved in it. Benefits of Cost control Helps in Revised estimation of cost: It is used for making changes in the cost information which is helpful in managing the project. Right stakeholder must be informed as pefr the need. Budget Updates: Budget updates are nothing but updated form of cost estimation. In other words, they can be stated as various changes which are involved in approval of cost baseline. Estimation at Completion: Estimation at cost or EAC is a forecast of total cost involved in a project. Some of the techniques involved in a project are tracking of remaining portion of a project, estimated of budget of the remaining work. Finalization of Cost Budget plan - INPUT VALUES Hardware $ 20,000.00 Software $ 900.00 Development team salaries $ 8,000.00 Training $ 1,000.00 Total Development Cost $ 29,900.00 Hardware $ 12,000.00 Software $ 210.00 Operational Labor $ 16,000.00 Total Operational Cost $ 28,210.00 Approximate salary savings $ 110,000.00 Reduced operating cost $ 45,000.00 Total Benefit $ 155,000.00 Improvements For the improvements of cost management technique in the new call center set up following twelve techniques must be applied (Phillips, 2013). These are activity based costing, target costing, total quality management, Benchmarking, Reengineering of various business process, JIT inventory control system, maintaining a balance score card, six sigmas, life cycle costing, Kaizan costing, Theory of constraints and lastly activity based management. Kaizan Costing: It refers to the continuous and gradual upgradation through small activities instead of large or radical movement which can be achieved through innovation or innovation in technology (Potts and Ankrah, 2014). In other words, it can be stated as the method of cost reduction which takes place during the manufacturing phase of the product. This method can be used in the implementation of new call center as it can benefit it through a number of ways. Six Sigma: This method or technique was first implement in Motorola which is a well-known organization. This method mainly focuses in reducing the cost, improvisation of process and increase in profits (Potts and Ankrah., 2014). This method consists of six steps like identification of process, defining of it, taking proper measure, analysis of it, improvisation and lastly control. Above mentioned steps can be proved to be beneficial for this organization that is call center. If this methodology is applied in this call center setup it can help in reducing different cost involved in it. This will ultimately help in reducing various cost which are involved in the set of this project. References DRURY, C.M., 2013.Management and cost accounting. Springer. Flyvbjerg, B., 2013. From Nobel prize to project management: getting risks right.arXiv preprint arXiv:1302.3642. Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and controlling. John Wiley Sons.prize to project management: getting risks right.arXiv preprint arXiv:1302.3642. Larson, E.W. and Gray, C., 2013.Project Management: The Managerial Process with MS Project. McGraw-Hill. Martinelli, R.J. and Milosevic, D.Z., 2016.Project management toolbox: tools and techniques for the practicing project manager. John Wiley Sons. McNeil, A.J., Frey, R. and Embrechts, P., 2015.Quantitative risk management: Concepts, techniques and tools. Princeton university press. Meng, X., 2012. The effect of relationship management on project performance in construction.International journal of project management,30(2), pp.188-198. Mir, F.A. and Pinnington, A.H., 2014. Exploring the value of project management: linking project management performance and project success.International journal of project management,32(2), pp.202-217. Phillips, J., 2013.PMP, Project Management Professional (Certification Study Guides). McGraw-Hill Osborne Media. Potts, K. and Ankrah, N., 2014.Construction cost management: learning from case studies. Routledge. 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