The Main Elements Of Project Cost Management Information Technology Essay

Cost is believed to be one of the chief elements accounted for and monitored in any individual undertaking. Nassar explains that in undertaking direction cost, as an component, is broken down into three chief procedures, cost estimating, which is undertaken during the conceptual phase of a undertaking, cost budgeting, this procedure chiefly appears after the conceptual design has been completed and cost control, which takes topographic point throughout the life of the undertaking.

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Gray and Larson ( 2002 ) province that cost of undertakings at their conceptual phase may divert from their expected cost by 60 % above estimated cost or every bit low as 30 % below estimation. While undertakings where deliverables are defined, the concluding cost may increase up to 30 % higher than the expected cost or diminish up to 15 % less than the expected cost. Finally, undertakings where work bundles are defined the divergence scope from the estimated monetary value is smaller in peculiar the divergence may lift up to 15 % over estimation, or pervert every bit alow as 5 % below estimation. Furthermore, to restrict the fluctuation between undertaking estimation and concluding cost, Nassar ( 2006 ) suggests the usage of lessons learned and project files and implement proper WBS and undertaking agenda and staffing direction programs. Further, Turk ( 2006 ) recommends that it is preferred for new undertakings, whenever similar old undertakings exist, to utilize the old undertakings processes as a baseline merely[ 1 ].

Lewis and Wong ( 2005 ) argue that rework histories for 30 % of the entire undertaking cost. The major causes of such rework are associated with hapless planning, chiefly resources allotment lacks, and uninterrupted alteration in range. Hence, Ritz ( 1994 ) suggests that it is of import for the proprietor of the installation to supply the needed economic life and funding restrictions of the installation under design and/or building. Nassar ( 2006 ) recommends that, during the cost budgeting stage, undertaking squad generates project baseline, where the budget is phased through clip to enable monitoring and control undertaking ‘s cost public presentation, the baseline is represented via an S-curve. Additionally, Nassar ( 2006 ) suggests placing undertaking support demands.

Subsequent to be budgeting, uninterrupted undertaking cost monitoring and comparing to project budget is critical to keep the undertaking within budget. In general, for any individual undertaking, there are two supervising systems a general monitoring system, which is known by most undertaking directors and includes budget and quality confirmations, and a elaborate monitoring system, which exerts high accent to concentrate on of import activities and mileposts, building of preventive and disciplinary steps and guarantee reasonable reactions ( Pull offing Projects Large and Small, 2004 ) .

Hormozi ( 1999 ) explains that one technique, which may be used to minimise excess cost, is the usage of cost control studies and compare existent to planned outgos to place and calculate excess outgos. Furthermore, Nassar ( 2006 ) explains that it is of import to implement “ Value Engineering ” , which is to carry on Sessionss whereby the invited parties are applied scientists that have no direct connexion to the undertaking meet together in the presence of the undertaking director and a facilitator, and discus agencies and ways, which, if implemented decently, may shorten the undertaking ‘s clip, continue high undertaking quality and cut down undertaking cost. Westland ( 2006 ) explains that undertaking cost can besides be managed through a method called “ cost direction procedure ” , which may assist to accurately record disbursals incurred[ 2 ]. Additionally, Westland ( 2006 ) references that such method can merely be undertaken via proper signifiers, which are completed by squad members to bespeak payment of certain disbursals. Additionally, Westland ( 2006 ) suggests that payments shall non be made anterior to acknowledge of undertaking director ‘s approved expense signifier. Westland ( 2006 ) recommends that disbursal signifiers shall include undertakings listed in the undertaking program, day of the month on which the disbursal took topographic point, the type of disbursal, for illustration equipment, labour etc. the claimed cost, the beneficiary and invoice figure. Furthermore, Westland ( 2006 ) suggests that these signifiers should be prepared, submitted and entered into the disbursal agenda on hebdomadal footing to enable proper and thorough monitoring. Similarly, Nassar ( 2006 ) explains that proper cost control may positively impact causes of undertaking baseline fluctuations, guarantee that all required alterations are approved and do non transcend authorised budget and let self-generated direction to alterations. Further, Nassar ( 2006 ) recommends the usage of public presentation measuring tools such as the earned value analysis, which is shown in Table 1 below.

Table 1 Earned Value Analysis

( Nassar: 2006 )

Term

Equation

Indicates

Agenda Discrepancy

SV = EV – PV

Good if & gt ; = 0

Cost Discrepancy

CV = EV – Actinium

Good if & gt ; = 0

Schedule Performance Index

SPI = EV / PV

Good if & gt ; = 1

Cost Performance Index

CPI = EV / AC

Good if & gt ; = 1

Estimate at Completion

EAC = BAC / CPI

Actual Cost

Estimate to Complete

ETC = EAC – Actinium

How much more to pass

Discrepancy at Completion

VAC = BAC – EAC

Good if & gt ; = 0

Note: EV = Earned Value PV = Planned Value

AC = Actual Cost BAC = Budget at Completion

Finally, there are external and internal uncertainnesss which may do escalation in undertaking cost. These uncertainnesss include Inflation, fluctuation in currency exchange rate, inability to procure stuff and equipment monetary values from sellers and provider, unanticipated costs associated with employees and fees compensated in return for consultancy services. Hence, it is suggested that if a undertaking experiences excess disbursement at any point in clip during the life of the undertaking, undertaking director should look into that issue to guarantee that it ne’er occurs once more and/or to work out the affair ( Pull offing Projects Large and Small, 2004 ) .

Change Management and Quality

Nassar ( 2006 ) describes that Change quality direction comprises of all processs and procedures necessary to vouch that the undertaking ‘s quality criterions are met. Nassar ( 2006 ) further argues that the major quality direction processes include quality planning, quality confidence, to guarantee that all procedures are decently implemented and quality control, through proving assorted end products of the undertaking.

Lewis and Wong ( 2005 ) stress on the importance of fixing quality control program during the initial phases of the undertaking. The program may include all needed activities for design quality and quality confidence and control. Whereas Ritz ( 1994 ) explains that the major countries of quality control are chiefly the undertaking design footing, technology, equipment and stuffs, field building and concluding review and credence. Further, Lewis and Wong ( 2005 ) recommend that the undertaking quality control program may include a high degree undertaking mileposts program, which consists of the five major stages in the undertaking ; these are induction, planning, put to deathing, monitoring and control and meeting mileposts for each several stage. Additionally, the program can include review meetings so as to enable quality squad to fix quality confidence and design quality programs. Subsequently, as Lewis and Wong ( 2005 ) describe, the design quality program may include design reappraisal agenda, installing of tracking system and disciplinary action programs, while the quality confidence program may include needed trials to mensurate the quality of the designed merchandise. Further, Lewis and Wong ( 2005 ) recommend using hazard direction meeting agendas, and job log reappraisal agendas. On the same context, Douglas ( 2003 ) high spots that during the early phases of the undertaking, it is important to hold constructability reappraisals, through which mistakes in design can be resolved. Yet, Ritz ( 1994 ) explicates that during building stage quality confidence specializers must be available in the building site all the clip and review studies should be filed on regular footing. Additionally, Ritz ( 1994 ) warns that quality confidence field applied scientists are responsible to inspect assorted undertakings such as concrete pouring and steel hard-on and arrange for local field testing.

Nassar ( 2006 ) explains that proper quality control may assist continue quality criterions of the undertaking. There are several techniques which may be used to back up quality control ; these include the usage of fishbone diagram, which is used to understand the causes and effects of a phenomenon ( Fishbone Diagram a Problem Analysis Tool 2002 ) . Further, the creative activity of a fishbone diagram starts with positioning the job to be studied in the caput of the fish, so label each bone of the fish, normally these labels are extracted from the major classs, which are the 4 P ‘s encompassing of processs, policies, people and topographic point, the 4 M ‘s that are machines, stuffs, methods and manpower and the 4 S ‘s consisting of accomplishments, providers milieus and systems. Subsequently, through a technique such as brainstorming, factors that may be impacting the job under survey shall be highlighted and so analyzed ( Fishbone Diagram a Problem Analysis Tool 2002 ) . Figure 3 below illustrates the Fishbone Diagram.

Figure 1: Fish Diagram

( Nassar: 2006 )

Time

Machine

Material

Energy

Measurement

Environment

Major Defect

Potential Causes

Consequence

Nassar ( 2006 ) suggests that other diagrams and tools may besides be used in undertaking direction quality control, such as Scatter Diagram to enable quality squad place the relationships between alterations experienced in two variables. In Scatter Diagram the two identified variables are plotted, whereby one variable is plotted on the X axes while the other variable is plotted on the Y axes. Then paired samples shall be taken, in general these samples may be between 50 to 100 samples. Subsequently the samples shall be plotted on the graph, where both axes are positioned to make a squared plotting country and labeled in multiples. Following samples plotting, if the value of Y additions as Ten additions so the relationship between the two variables is strongly positive. However, if the value of Y decreases as a response to an addition in X, so these variables are strongly negatively related, yet if value of Y increases somewhat as the value of X additions, a weak positive relationship may be in topographic point. Conversely, a complex relationship may be determined when a relationship seems to be at that place, but it is non identifiable. Finally, in the instance that there is no connexion at all between the motion in X axes and the motion in Y axes so no correlativity between these two variables.

Nassar ( 2006 ) explains that there are assorted tools and techniques which may be implemented for quality confidence. These techniques include the execution of quality audits, which is a prearranged technique used to verify the public presentation of the undertaking and its conformity with the policies and processs set Forth during early phases of the undertaking, to later cut down cost of quality. Further, quality audit may be carried out indiscriminately to corroborate that restorative and preventative actions and approved alteration petitions were expeditiously implemented. In add-on, Nassar ( 2006 ) recommends execution of procedure analysis to size up jobs, restraints and valueless activities which have occurred. This tool besides analyzes the root cause of jobs and may assist bring forth preventive steps. Through quality confidence, Nassar ( 2006 ) explains, petition for alteration may be issued, disciplinary actions may be introduced and project direction program may perchance be updated.

Ritz ( 1994 ) suggests that quality confidence of equipment and stuffs may be implemented at the makers ‘ site, but such activity may perchance be executed for complex undertakings and extremely sophisticated and bespoke equipment. It is indispensable to verify the quality of the equipment prior to shipment to forestall excess work during building, which may impact quality and finally cost. It is of import that responsible parties carry out site visits at critical points during the fiction rhythm. Prior to shipment equipment review should be executed and all paperss and drawings applicable to the specified equipment must be certified and made portion of the equipment file. Ritz ( 1994 ) explains that it is non considered to be cost effectual to inspect of the shelve equipment, such as valves, pipes and adjustments, nevertheless, for equipment supplied from 3rd universe states review of equipment must be applied. Finally, Ritz ( 1994 ) recommends that anterior to mechanical completion ; concluding installation check-out procedure and credence must be completed.

Finally, harmonizing to Ritz ( 1994 ) design and quality related cases are increasing. The initial and most of import country impacting the quality of undertaking is the proprietor ‘s design footing. This country is affected by internal every bit good as external factors including, market forces, expected market life of the merchandise or service, merchandise, service and installation economic sciences, funding capableness, operational safety, environmental and districting factors, authorities ordinances, company or bureau policies and care, services and operating costs. Additionally, since alterations in the design during field work tend to be really expensive and affect quality, Ritz ( 1994 ) explains that alterations to the undertaking design should be really limited.

Information and Communication Management

Communication plays a critical function in finding the success of a undertaking. Undertaking stakeholders, in general, are a mix of undertaking direction service suppliers, clients, sellers, building contractors, subcontractors and any other entity involved straight or indirectly in the undertaking including, in some cases, general populace. Hence, as Andy Gray ( 2005 ) describes, undertaking director must guarantee that all parties involved in the undertaking have the same apprehension at the beginning, since undertakings may neglect from the start if involved parties have different apprehensions[ 3 ]. Further, Shannon ( 2001 ) argues that the most of import factor for undertaking ‘s success is good communicating between all parties involved in the undertaking[ 4 ]. On the other manus, Turk ( 2006 ) argues that hapless communicating normally exerts destructive effects on the undertaking.

Communication amongst undertaking squad, and with executive direction

Communication between squad members is extremely of import during all stages in the undertaking. Wardt ( 2003 ) suggests that undertaking directors are encouraged to extinguish hierarchal boundaries, delegate undertakings and supply mentoring to their subsidiaries. Further, Larson ( 2004 ) indicates that line directors ( lead subject applied scientists ) may be really of import to the success of a undertaking. Hence, communicating with line directors during early life of the undertaking may help line directors to supply the undertaking director with the best campaigners suited for the occupation and promote line directors to supply their input and ideas refering to certain countries in the undertaking. Further, harmonizing to Larson ( 2004 ) , undertaking directors along with line directors, can work to supply squad members with the latest tools used to cut down cost and increase quality of work[ 5 ].

Wardt ( 2003 ) explicates that direction support in any undertaking is a primary driver for undertaking success. Larson ( 2004 ) describes that meetings with senior direction may be extremely good, as they allow the squad, represented by the squad director, to regularly discuss undertaking objectives, hazards, outlooks and deliverables. Additionally, Larson ( 2004 ) indicates that communicating with senior direction may guarantee that company policies and processs are non violated, precedences are understood and resources restrictions are highlighted. Furthermore, Hormozi ( 1999 ) suggests that senior direction should be ready to interfere provided the boundary lines which were set by the same are crossed. Further, Larson ( 2004 ) encourages team members to be unfastened and discourse all issues related to the undertaking and non restrict communicating and treatments to the good intelligence. Larson ( 2004 ) claims that senior direction have from experience what is sometimes adequate to work out struggles and redress hazards, hence, pass oning these issues to them may assist forestall or at least expedite solutions to bing jobs.

Turk ( 2006 ) explains that handiness of resources and clip restriction restraint the end product of any squad ; hence undertaking directors should hold with squad members on the squads ‘ production capablenesss under such restraints. Additionally, Larson ( 2004 ) describes that engagement of undertaking squad during the planning and finalisation and sweetening of undertaking ends stages may be one of the chief drivers for success. Furthermore, Turk ( 2006 ) suggests sharing information during internal undertaking reappraisals.

Communication between Change direction house and the client

Larson ( 2004 ) indicates that undertaking directors ‘ interaction with the client may be the most of import action in the undertaking. Zhang and Flynn ( 2003 ) explicate it is extremely important to hold good communicating tools and processs between the client and the undertaking direction house to pass on alterations in the range of work, control paperss, stand on the position of the undertaking and finalise pending issues[ 6 ]. Further, Ritz ( 1994 ) explains that good and unfastened communicating with the proprietor of the installation is critical to the success of project execution.

Zhan and Flynn ( 2003 ) explain that undertaking cost escalate while range of work continuously alteration in an on-going undertaking, which, finally, may increase the likeliness of misgiving and incrimination between client and the undertaking direction house. Therefore, integrating between client and project direction houses may play a critical function in decreasing the civilization of incrimination and misgiving that may originate if the two houses are isolated. Douglas ( 2003 ) indicates that alteration orders, for most of the clip, are ineluctable and one manner to accomplish timely execution of alteration orders is through proper communicating between all forces involved in the undertaking. Additionally, there are two chief issues which Shannon ( 2001 ) addresses sing relationship with the client, these issues are typically to further and prolong effectual communicating and set up a positive work environment while minimising struggles.

Turk ( 2006 ) contends that undertaking direction house should be able to obtain, from the client, complete and comprehendible information sing the demands and specifications of the merchandise. Additionally, Ritz ( 1994 ) explains that technology house should show the proprietor with the undertakings ‘ conceptual design for blessing. Once credence is achieved, the duty of quality confidence is passed to the design squad.

Internal hebdomadal advancement meetings, which normally last for a upper limit of one hr, are extremely of import to discourse a two-week agenda, talk about forthcoming occupations and minimise surprises. Additionally, through such meetings the contractor is compelled to execute best patterns ( Shannon 2001 ) . Furthermore, Shannon ( 2001 ) describes, in add-on to internal hebdomadal advancement meetings, monthly meetings with undertaking proprietors are really good.

Change Management Communication Tools and Procedures

Larson ( 2004 ) suggests that Change Management communications program should be created and executed. Additionally, he suggests that communicating records can restrict miscommunication and evitable alterations. Furthermore, Hormozi ( 1999 ) explains that to clearly pass on the position of the undertaking position study may include the current status of each undertaking and its relevancy to the program, consequence of delayed undertakings on the undertaking ‘s terminal day of the month, cause of undertaking hold, undertaken or suggested redresss to set the undertaking back on path, consequences of redresss and extra steps required to be taken to manage the state of affairs.

Meetings are a major tool for communicating ; nevertheless Nassar ( 2006 ) explains that there are certain regulations and process, which shall be implemented to reason a successful meeting. These regulations and process include invitation of the right people for the meeting, readying and distribution of run intoing agenda in front prior to the meeting, remain inline with the docket during the meeting and within the clip allocated and at the terminal of the meeting undertaking deliverables duties shall be allocated and proceedingss of run intoing shall be documented and distributed. Furthermore, during client meetings proprietors aims are reviewed through an exercising where each proprietor ‘s representative grade ‘s the consequences under the identified aims from 1 to 5, 1 being unsatisfactory while 5 being satisfactory. Post taging the consequences, a entire norm is calculated to stand on the overall satisfactory degree. In instance the difference in one of the aims, between two of the proprietor ‘s representatives, is greater than one, an unfastened treatment takes topographic point. Furthermore, Stanleigh ( 2006 ) emphasizes the importance of holding “ Project Close-out Meeting ” instantly after completion of a undertaking to reexamine incidents which took topographic point during the undertaking and what are the suggested preventive steps which may be taken to guarantee that such incidents do n’t go on once more. Stanleigh ( 2006 ) suggests that all people involved in the undertaking including undertaking patrons, director and squad and any other outside resources which may hold contributed in the undertaking. Additionally, Nassar ( 2006 ) identifies several other methods and medium used for communicating include electronic mails, picture conferences, web portals and on-line database.

Longman and Mullins ( 2005 ) clear up that the ability of a squad to pull off its undertaking depends on the information utilized to put to death the undertaking. Therefore, it may be important for a squad to have accurate and good information through inquiring. However, Longman and Mullins ( 2005 ) argue that benefits from oppugning will non be realized if the oppugning party is non a good hearer. Further, Nassar ( 2006 ) explains that the message transmitter shall guarantee that the message, which was sent, is comprehensive and crystalline, while the message receiver shall corroborate that the standard message is understood. On the other manus, Shannon ( 2001 ) reveals that Request For Information ( RFI ) is another communicating tool, which may be used for communicating, through which contractors may make full out a signifier bespeaking information, and base on balls this signifier to the undertaking director, who in bend reviews the petition and answers back within a period of clip agreed upon earlier between the contractor and the undertaking director.

In the undertaking direction and building industry, information systems have become a primary constituent. Hormozi ( 1999 ) explains that information engineering has become an of import tool used in assorted industries and professions. Yet, Nassar ( 2006 ) finds that there are many facets which influence undertaking ‘s information engineering ; these facets include the necessity of information provided, the engineering available and expected undertaking work force and environment. Nassar ( 2006 ) argues that information distribution is extremely effectual when this information is delivered to all stakeholders in a timely mode. Additionally, Shannon ( 2001 ) prefers to use the new engineerings that deliver easy and fast communicating. Furthermore, Shannon ( 2001 ) returns to propose the usage of undertaking web site and cameras over the cyberspace. While Hormozi ( 1999 ) discusses that Project Management Information Systems ( PMIS ) provide utile information and aid bring forth utile bundles such as Gantt Charts, milepost studies, allocation of resources and cost of undertaking. However, Hormozi ( 1999 ) warns that full dependence on PMIS may negatively impact the direction of the undertaking and finally the undertaking.

Human Resources Management and Change Management Unit

A cardinal subscriber to successful undertakings is core values, beliefs, environment and relationships within undertaking squad and between undertaking squad and other parties involved in the undertaking. Pull offing Projects Large and Small ( 2004 ) argues that undertaking techniques, processs and methodological analysiss, if used and studied sagely, may assist to accomplish a successful undertaking. However, it explains that the most of import individual piece in a undertaking is team members and forces involved in the undertaking, non to advert that the environment within a undertaking extremely influences the public presentation of the undertaking squad. Larson ( 2004 ) describes that the ability to pull off people in the undertaking is project direction. Hence the ability to pull off people and carry through their demands within a peculiar undertaking is really important to the end product.

Undertaking squads are made of persons and since persons are alone in their demands, demands, cultural backgrounds, position and experiences, undertaking directors prior to delegating undertakings and duties, they shall acknowledge each person and esteem its singularity. Harmonizing to Maslow ( cited in Hellriegel & A ; Slocum 2004, p.119 ) the hierarchy of human demands consists of five degrees, which are physiological, safety, association, regard and ego realization, whereby whenever an single achieves satisfaction in a degree, this degree will no longer function as a motivational factor[ 7 ]. Therefore, undertaking director shall guarantee that the undertaking squad ‘s demands are considered. Mistake: Reference beginning non found