Cost Management Planning
Discuss About The Global Professional Standards Project Cost.
The cost management panning is the process of budgeting which involves developing the cost estimates for a given project of the company. The project manager in this planning will be responsible for estimating the type of costs that will be incurred in different phases of project. The responsibility of project manager will also include the consideration of various risk concerned with project completion and execution. The estimation of the same will help the project manager in completing and estimating the cost estimates with best quality and mitigating the risk associated. The estimation of costs associated with the budgets will help the manager in developing a budget. The budgeting procedure will help in controlling the expenditures and project cost (Nicholas & Steyn, 2017).
The process of project cost management and budgeting will include inputs and outputs described as under:
- Project contract or initial budget – The first input required in this process will be obtaining the project contract along with the sample budgeted plan required in the project development.
- Resource requirements – The estimation of the resources required in order to complete the project timely will be obtained on the basis of the project contract obtained.
- Resources cost estimates – The costing estimates will be developed after recognizing the resources and the interest rate prevailing in the market for acquiring the equipment’s and other materials (Turner, 2016).
- Activity duration estimates – The duration of the activities and the completion time for project will be analysed in advance by the project manager.
- Historical information and market conditions – The historical information about the performance of the management in completing the past projects and the market trends and economic conditions in regard to suitability of the project will be defined appropriately.
- Chart of accounts structure – This will be associated with preparing and presenting the accounting work.
- Cost estimates by activity – The cost estimates in reference with each of the activities to be performed in the project will be considered and a suitable document will be generated in this respect.
- The project budget – The budget related with the project will be generated in order to help the manager in preparing the resource allocation budgets.
- The budget variance report – The variance report will be presented in order to find the variances and deficiencies (Heagney, 2016).
Expert judgement – The expert judgement will be associated with using the experiences and knowledge of the experts in order to estimate the cost associated with each of the activity in the project. The technique will consider the unique factors which are specific to the project and the same will help in giving accurate estimations.
Analogous estimating – The analogous estimating is the process in which historical data from the similar projects is utilized in order to estimate the cost. The budgeted estimates can be adjusted appropriately considering the differences. The technique is used generally in the early stages of the project and has been considered less accurate than other techniques.
Parametric estimating – The technique is associated with using statistical modelling in developing cost estimates. The historical data related with key cost drivers will be used in estimating the cost activities. The duration of the project and completion will be based on that.
Bottom up estimating – The individual work packages are used in this technique to estimate the cost and related activities. This includes considering a more granular perspective in order to estimate the cost and providing a more accurate estimations for the project (Nicholas & Steyn, 2017).
1.3.1 Level of Accuracy, Unit of Measure and Control Thresholds
1.3.2 Rules for performance measurement
1.3.3 Cost reporting and format
1.3.4 Process management
The project manager has prepared the budget after taking into consideration the historical data and the market information in completing the project and this has resulted in obtaining an accurate estimate about the level of activities to be performed in the project. The processes involved in determining the plan for the project has been made after a deep research into the contract statements and the same has been considered for recognizing the requirements and ensuring the best quality statements in this regard. Also the tools and techniques utilized in estimating the activities has been appropriate in consideration to the market influences and cost quality programmes. Therefore the accuracy of project plan is justifiable in this case (Harrison & Lock, 2017).
Inputs and Outputs
Updating, Monitoring and Control
The quality management plan will help in assuring that the activities concerned with planning, designing and delivering the products and services in a project are implemented and operated effectively in order to achieve the desired objectives. The project manager needs to identify the quality requirements and should consider all the specifications in this regard to complete the project appropriately. While considering these aspects the standards and regulatory requirements should also be considered (Heagney, 2016).
The various tools and techniques which can be used to ensure the highest quality standards in project planning are:
- Cost benefit analysis and cost of quality – The cost benefit analysis will be concerned with cost benefit ratio to be computed for the project. The costs associated with providing various benefits in the project will be determined in order to obtain the trade-offs of providing quality (Heldman, 2018). The cost of quality will also be a significant tool in determining the costs which shall conform to the quality required for the project. There should be achieved right balance between the quality and the cost incurred in this behalf.
- Cause and effect diagrams – The cause and effect relationship diagram can be developed in order to identify the problems in developing the project and analysing the reason behind them. The type of diagram will help in obtaining the effects of the potential causes of the problems and reducing them to an appropriate level.
- Control charts – The control charts can be used to determine and analyse the stability of the project. It helps in recording the behaviour of the project during its lifetime and helps in identifying the variances in order to control them.
The cost of quality will confirm all the costs that are required to maintain the appropriate quality standards. And these are as follows:
- Prevention cost – The cost are associated with keeping away the defective products form the customers of the company.
- Appraisal cost – The cost is associated with confirming and checking the product and includes inspecting, testing, studying etc.
- Failure cost – The failure cost can be recognized in two different categories including internal failure costa and external failure costs. The severity of the cost depends on the exposure with which the failure has happened to the project.
The cost of non-conformance can be direct or indirect and the same shall also be considered in cost quality (Pheng, 2018).
Flow charting and histograms – The flow charting tool helps in determining the flow of activities involved in completing the project and helps in identifying the potential problems and weakness associated with the project quality. The same can be used to evaluate the potential flaws in the project. The histogram will help the project manager to record the graphical representations of event frequencies (Harrison & Lock, 2017).
Quality manager conducts day-to-day operations which include the resource scheduling, team communications. He looks out for the best policies (Corona-Suarez, AbouRizk & Karapetrovic, 2014). Quality Lead is in charge of the results of testing and the usage of good testing practices for their assigned focus area. The tester is responsible for the validation of the test results. The tester prepares test cases and scripts.
Quality planning involves setting up of quality objectives and specification for conducting the project efficiently. The approach also involves the resources needed to meet those project objectives (Chen & Luo, 2014). The project managers use proper methodologies to assure quality planning for the product. The project manager must execute the quality plans appropriately and must assure that quality expectations are met for the product.
Quality Assurance approach consists three core quality assurance functions like the improving quality, defining quality and the measuring quality. Defining quality involves developing standards of quality. The improving quality involves quality improvement methodologies by closing the gap between the current and the expected project quality (Corona-Suarez, AbouRizk & Karapetrovic, 2014). The measuring quality involves quantification of the current level of performance in accordance with the quality standards expected. The measuring quality is associated with identification the indicators for performance, collection of data and analysis of information.
Quality control approach involves a set of procedures that the project follows the quality criteria and meets the demands of the client (Chen & Luo, 2014). Quality control is somewhat similar to quality control. Quality Assurance is a procedure that assures that a particular project is being undertaken following the specified requirements. Quality Assurance and Quality Control are expressed as one single expression.
Quality improvement is the approach by which the practice performance can be analysed and the efforts to improve the product performance. Quality improvement model assists in the collection of data and analysis of data and the test change (Corona-Suarez, AbouRizk & Karapetrovic, 2014). There are several benefits of Quality Improvement. It helps in determining and prioritising the potential areas for the improvement. Six Sigma is one kind of quality improvement tool that helps in diminishing the variation as well as the defects.
References:
Chen, L., & Luo, H. (2014). A BIM-based construction quality management model and its applications. Automation in construction, 46, 64-73.
Corona-Suarez, G. A., AbouRizk, S. M., & Karapetrovic, S. (2014). Simulation-based fuzzy logic approach to assessing the effect of project quality management on construction performance. Journal of Quality and Reliability Engineering, 2014.
Harrison, F., & Lock, D. (2017). Advanced project management: a structured approach. Routledge.
Heagney, J. (2016). Fundamentals of project management. AMACOM Div American Mgmt Assn.
Heldman, K. (2018). PMP: project management professional exam study guide. John Wiley & Sons.
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Lock, D. (2017). The essentials of project management. Routledge.
Nicholas, J. M., & Steyn, H. (2017). Project management for engineering, business and technology. Taylor & Francis.
Pheng, L. S. (2018). Project cost management. In Project Management for the Built Environment (pp. 97-112). Springer, Singapore.
Smith, P. (2014). Project cost management–global issues and challenges. Procedia-Social and Behavioral Sciences, 119, 485-494.
Smith, P. (2016). Global professional standards for project cost management. Procedia-Social and Behavioral Sciences, 226, 124-131.
Turner, R. (2016). Gower handbook of project management. Routledge.
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