Analysing Project Cost Management For Projects

Analysing Project Cost Management For Projects

 

 

Project cost management for projects is primarily concerned with the cost of the resources needed to complete project activities. Project cost management should consider the effect of project decisions on the subsequent recurring costs of using, motivating and supporting the product, service or result of the project. For example, limiting the number of design reviews can reduce the cost of the project but could increase the resulting product’s operating costs.

 

project cost management for projects

 

Another aspect of cost management is recognising that different stakeholders measure project costs in different ways and different times. For example, the cost of an acquired item may be measured when the acquisition decision is made or committed. The order is placed, the item is delivered, or the actual cost is incurred or recorded for the project accounting purposes.

 

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In many organisations, predicting and analyzing the prospective financial performance of the project’s products performed outside of the project. In others, such as capital facilities project, project cost management can include this work. When such predictions and analysis are included, project cost management may address additional processes and numerous general financial management techniques such as return on investment, discounted cash flow, and investment payback analysis.

 

Emerging trends…

Within the practice of Project Cost management, trends include the expansion of earned value management to include the concept of Earned Schedule. 

 

Earned Schedule is an extension of the theory and practice of Earned Value Management. Earned Schedule theory replaces the schedule variance measures used in traditional Earned Value that is Planned Value with Earned Schedule and Actual Time (AT).  

 

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Using the alternate equation for calculating schedule variance ES-AT, if the amount of earned schedule is greater than 0, than the project is considered ahead of schedule.

 

In other words, the project earned more than planned at a given point in time. The Schedule Performance Index (SPI)using earned schedule metrics is ES/AT. This indicates the efficiency with which work is being accomplished.

 

Earned schedule theory also provides formulas for forecasting the project completion date, using earned schedule, actual time, and estimated duration for the project.

 

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Adeniyi Salau

Adeniyi Salau Scrum Master Certified , CCNA R&S , BeingCert and Scrum Certified Digital Marketing Professional, CEP, MOS, MCP, CSCU (Project 2016), Microsoft Certified Security and Networking Associate is a Google and Beingcert Certified Digital Marketer, Project Manager and SEO Expert of repute with about a decade of Blogging and online marketing experience. He is always ready to share his experience with others.

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