COST MANAGEMENT PLAN

Posted on February 27, 2022 by Cheapest Assignment

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Occupational Health Management Plan

Budgetary Assumptions

The budgetary assumptions are as follows:

  1. Equipment- it was assumed that the equipment will work at full capacity and hence maintenance costs shall be saved.
  2. All facilities procured shall also work at full capacity thereby eliminating the risk of the additional project cost.
  3. Although it is assumed that the human workforce will work and manage the work properly and that there will be no additional costs incurred on the same. The terms of workers were contractual and hence they would perform duties as per the terms and conditions enumerated in the contract. However, a contingency of 1% was kept to meet any unforeseen circumstance related to human issues.
  4. Materials- the materials required in the project was all cloud and network-based, i.e. intangibles, such as software, middleware, firewall. This eliminated the risk of any loss or additional cost.

RECRUITMENT & SELECTION

In our budget, it is difficult to ascertain the profit since the turnover or project reimbursement from the client is not known. Hence we prepare a cost budget variance report:

Resources  Resource cost  Contingencies and Tolerances  Overheads/Indirect cost ( whole phase) 
Human resources  $3,000.00  inaccuracy and inefficiency of  +11% 330
Fees $1,000.00   
Services and Statutory Costs $4,000.00  Risk of Covid and increased cost of services incidental + 20%                      $800
Materials $3,000.00  escalation of + 10% $300 
Equipment  $5,000.00  escalation of + 10% $500 
Facility and Utilities  $2,000.00  escalation of + 10% $200 
Control threshold $1,000 
Estimated cost $18,000.00    $3,130 

Here, the variance has been taken due to the following reasons:

Any activity involving humans will need to provide for an accuracy variance of 10%. Hence, we have given an additional cost of 10% for materials, equipment and other facilities.

Addressing an Environmental Issue

Cost management plan:

The various cost management plans of ‘Destination- Australia’ are as follows:

  1. Unit of measurement- The project’s platform is online. Hence the unit of measurement of cost shall be the online time spent by its users. and the costs will be determined based on a percentage of completion of the project. The repository of such an online platform, where users are able to add pictures and videos of their travel and experiences in Australia and browse through the content, will help the National Archives of Australia to keep track of the migrant’s count.
  2. Precision Level- This can be maintained by keeping a check on physical resources such as materials, equipment, facilities, thereby eliminating any kind of wastage or leakage of cost.
  3. Accuracy- Accuracy can be maintained by employing experienced and well-trained staff and also spending time and effort on training them about the requirements of the project. Proper planning, management and control of employees can eliminate costs due to inaccuracy. This cost can be expected more during the initial phase of the project, hence a 10 per cent of increase or decrease in cost can be expected as a variance.
  4. Maker-checker approach- all the expense and overhead statements shall be maintained in online tools such as Microsoft Excel worksheets and will be made by one person and validated by a senior to avoid inconsistency costs.
  5. Conservative budgeting- while giving a strong budget goal, the contingency provisions have been kept to make sure some room is left for any extra overhead. 
  6. Performance yardstick- the website designing project was enumerated into various levels and the performance of the team could be measured on timeliness and costs incurred vs. the expected idea.
  7. Reporting format- the reporting of the budget was detailed, and transparent hence giving the users of the information a clear idea

Financial Management In Covid-19

Tools used for measuring cost variation

 

Three-point estimating 

(Discuss why are you choosing this to analyze the case study) 

Resources Optimistic Cost  Most Likely  Pessimistic cost  Expected Cost 
Human resources 2700 3000 3300  3000
     
Fees 1000  1000 1000  1000
Equipment 4500 5000 5500  5000
Services and Statutory Costs 3600 4000  4400  4000
Facility and Utilities 1800 2000 2200  2000
Material 2700  3000 3300  3000
       

E = (o + 4m + p ) / 6

where E is Estimate; o = optimistic estimate; p = pessimistic estimate; m = most likely estimate

Budget Performance Report

Resources Planned  Actual  Variance 
Human resources 3000 3330 330
     
Equipment 5000 5500 500
Material 3000 3300  300
Fees 1000 1000 0
Facility and Utilities 2000  2200  200
Services and Statutory Costs  4000 4800 800
     

Re-planning of the project:

Resources  Resource cost  Contingencies and Tolerances 
Human resources  $3,330.00  inaccuracy and inefficiency of  +11%
Fees $1,000.00 
Services and Statutory Costs $4,800.00  Risk of Covid and increased cost of services incidental + 20%
Materials $3,300.00  escalation of + 10%
Equipment  $5,500.00  escalation of + 10%
Facility and Utilities  $2,200.00  escalation of + 10%
Control threshold         $1,000
Estimated cost $21130.00   

Reasons for replanning:

  1. The human resource amount has been recalculated as per the given two assumptions. Firstly that 1% of the workforce budget was given to hire temporary employees, and hence 1% to be added to the budget. Secondly, the initial budget of the project is more than $5000 and hence 10% variance is given for accuracy. All costs included in the budget that calls for accuracy have to be included in the 10% bracket, such as facility and utility, equipment usage, and materials usage. Hence 10% cost escalation has been provided. 
  2. Since details of costs and stage of the project are not mentioned, it has been assumed that the computation and details are shared for the project as a whole and similar calculations are being done.

Probabilistic Seismic Model

Ways of overcoming cost variance:

  1. Cost curtailment- where possible, unnecessary delays and extra incidental costs can be ignored.
  2. Reforecast- A well-defined and well-managed project always has a plan B. Once the cost variances go high, the project team should immediately replan and reformulate their budget.
  3. Thresholding- looking at earlier projects and taking ideas and cues on cost management can be helpful.

Financial Completion Activity

 

on completion of the project, one needs to ensure that the variance has not been extremely high, or even higher than the tolerance level. Before delivering the project to the client, it is mandatory to ensure the following:

  1. Specification check- that the project has been made exactly or as close as possible to the specifications made by the client. 
  2. Cost check- that the costs incurred are not haywire and way beyond expected. There has to be some streamlining between the variances.
  3. Testing- the check (mostly by an outside independent party or through surveys) that the project behaves as expected and all necessary information is present on the website.

Review of the project performances

 The review of the project performance is mostly not cost-driven, but functionality is driven so as to ensure that it delivers what it has been formulated for. That it fulfils all expectations and is serving its purpose well. Also the visibility, promotions and appeal of the website work on fulfilling its performance.

Data Management in Healthcare

Issues occurred on the Project

from a control perspective, it is important to note that once the project is delivered, there has to be a mandatory check on the performance, and redressal of the same. However, each project is a learning experience for the team and a checklist like the one below helps to keep a track of all issues faced and how they were overcome, hence creating a baseline for future prospective projects.

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