Analysis on the supervision of the hottest project

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Analysis of project cost supervision

Abstract: the deviation chart caused by the change of recurrent expenditure ratio is the project report of 789 department engaged in task e, and the reporting time is the end of the fourth month. This saving in labor hours is enough to make up for the increase in recurrent expenditure. The final result in this case is a small and favorable deviation

a project cost accounting system is needed to monitor the cost benchmark. This analysis helps you identify changes in progress or performance benchmarks. We will discuss these issues and provide examples of cost reports that are usually generated by computers. We will also discuss earned value management systems

cost monitoring

the availability information required to monitor the actual cost of a project varies according to the project organization. Any company engaged in projects must have a project cost accounting system. Commercial customers may not review, especially when the contract price is relatively low. However, government organizations usually conduct routine audits during and after project implementation. The government group will not be able to input parameters, and the organization will also review the project cost of fixed price projects. Therefore, companies working for federal and other government agencies and many companies in the construction industry have good project cost accounting systems to record labor and non labor project costs

the company must also distinguish between capital financial investments and costs or expenses that can be written off in the current financial period. Therefore, when a company implements a project to increase its capital infrastructure, the company must collect and report this cost. A typical case is to add a new production line in the factory. At this time, the labor cost and other direct expenses of the factory project are capitalized together with the purchase price of the newly installed production equipment. To sum up, this cost can be reviewed by the tax department. Although the company's system for collecting and recording such capital costs will not be as sophisticated as the system used for contract projects, such a retail system must exist

other companies that implement projects do not necessarily have a systematic project cost accounting system, for example, many companies that carry out new product development projects. For these companies, the important issues are to plan in advance what resources are needed, the time of product launch, and the expected profits, l; J. Z's profit compared with investment in other new products. Once the project starts, meeting the schedule requirements is the most important, compared with the actual cost is not so important. All costs (except for capital expansion for the construction of new or specialized productivity) are considered as expenses of the year, which is usually controlled by limiting the size of the number of employees

many projects, especially new finished product development projects, have been stopped before planning or entering the market (or later, before reaching the original profit target). Project managers sometimes mistakenly ask for projects to continue, on the grounds that a large amount of investment has been made. This is wrong because the costs incurred will be written off (although unrecoverable capital costs must be treated differently). It is by no means a good way to continue to invest in a project with little income to maintain it

computer cost report

many organizations, especially large organizations and those who do projects for government agencies, generally have computer-generated project cost summary reports. These reports are usually generated by a centralized enterprise information system. In some cases, they also include schedule deviations. There are a large number of reporting systems available for purchase or rent. Figure 19-1 shows the help of the report to project supervision. The actual cost (and progress) data are collected from employees' time cards, purchase orders, and other direct project costs of the project. Compare these data with the plan, analyze the significant differences between them, and take corrective measures to promote the rescheduling. Making a comparison between reality and plan will remind people that some trends will lead to future deviations, and of course, it will also lead to rescheduling. This comparison must be made in each cost center (such as department) and work breakdown task to be more effective

although more information is better than less information, the project manager must carefully draw a line between too many forms, too much information and too little information to supervise the project. Project managers and senior managers should not mistakenly believe that only the actual cost data (which can be reported in great detail) is the only standard to measure whether the project is healthy (which requires a very difficult three-dimensional standard)

most organizations that use computer reports for project management release labor distribution reports once a week. The report lists the names of the people who participated in each project during the last week. This key report provides the project manager with an early warning signal. A detailed review of the report will find that there are people who should not have participated in your project (expenses), but the people you want to participate in do not appear in your project

cost supervision problems

in this part, several cost reports of the "material research project" will be reviewed to illustrate some problems in project control. The actual reporting formats of different organizations are different, and the level of detail of the issues described is also different (the figure is an example of the collaborative information that a more reasonable and helpful cost reporting system should provide). These reports are usually prepared by the centralized project cost accounting function. Although the amount of data to be processed is huge, even for experienced project cost accountants, it may also be a burden. But small projects do not have to use computers

deviation caused by schedule

the figure is the project cost report of Task B undertaken by a commercial department (Department 456) at the end of the first month. Generally speaking, this report will be provided in the middle of the second month (in this case, February). In this case, labor and current expenditures are in line with the plan. But for non labor costs, there is a favorable deviation. In other words, the plan will cost $4400, but it hasn't actually cost a penny

the figure shows the corresponding tasks and phased commitment reports of department 456. Commitments amounting to $4400 have been incurred. Therefore, the cost deviation only indicates that there is a bill that has not been paid for the electroplating part. Please wipe it with engine oil, rather than the deviation caused by activities that have not yet occurred. In other words, the cost of $4400 will happen later. This shows that the project cost report cannot be used well without examining the commitment report

in addition, purchasing a large amount of materials will also cause deviation. Some materials are needed in early tasks, while others are only used in later tasks. The reason for purchasing a large amount is to obtain more discounts. In this case, the material received (and the cost of the material) is not consistent with when the material is used in the task. Figure and figure show the same two reports at the end of the second month. Similarly, labor hours and costs as well as recurring expenditures are in line with the plan. In this case, there was an adverse deviation of non labor costs in the second month, because the travel documents were paid now, but in the plan, this expenditure should be in the first month. For the current total, by the end of the second month, the non labor deviation is still favorable. This favorable deviation includes the purchase order of $4000 that has not been paid, which is only due to the problem of payment time. In addition, there is a favorable deviation because the actual travel expenses are $50 less than the plan

deviation caused by inconsistency between actual work and plan

figure and figure are the project cost reports of the same task at the end of the third month and the end of the fourth month. At this time, the labor hours exceeded the plan in the third month, and there was an adverse deviation, but it just offset the favorable deviation caused by the non labor travel deviation. In the fourth month, the purchase order was paid, and the net deviation of the task became zero

figures to illustrate the deviation caused by the payment time and the difference between the actual work and the plan. These figures also illustrate the project cost reports and commitment reports that need to be examined in detail to understand the reported deviations and their importance

each accounting system is different in detail, so the project manager should know exactly how the report is generated (that is, what errors the report is prone to produce) and the specific meaning of each column of data

deviation caused by the change of recurrent expenditure ratio

the figure is the project report of 789 department engaged in task e, and the reporting time is the end of the fourth month. In this report, there is a favorable deviation in labor costs, while there is an unfavorable deviation in recurrent expenditure. What's going on? If labor deviation is beneficial, why is the current expenditure deviation disadvantageous

the reason for this problem is listed in the figure. The planned recurring expenditure ratio (100-4) is based on the workload planned by the technical support department (or the entire research and Engineering Department). However, as the basic workload of the whole department was lower than planned, the actual recurrent expenditure ratio at the end of the fourth month was higher than the original plan (up to 130%). The cost of recurrent expenditure has decreased to some extent. However, it is different from the reduction ratio of direct labor costs, because part of the recurrent expenditure is a fixed expenditure that cannot be reduced. Therefore, the actual current expenditure ratio becomes 130% instead of the planned 100% in this case (such changes in current expenditure are extreme, and we just want to reflect the possible effects of the change in current expenditure ratio). The deviation can be summarized as follows:

according to the plan, the senior technician should be full-time, but in fact, he was not released from the last project of the team until the beginning of the fourth month. If the labor force is not increased, the project will be delayed

the current expenditure is 130%, not 100% as planned. This will cause budget overruns unless offsetting savings can be found

figure 19-10 shows the project cost report of the technical support department at the end of the fifth month on this task. Senior technicians continue to have a favorable deviation, but it is partially offset by the unfavorable deviation among junior technicians and the unfavorable deviation of continuous recurrent expenditure. The current expenditure deviation is still attributed to the current rate of 130%, rather than the planned rate of 100%. Examining these variable factors, we will find the following information:

· senior technician is ill, so this labor cost is lower than the planned labor cost

· a junior technician who was not in the plan before was added to the project and completed the technician's work on time

· recurrent expenditure is still 130%, but the final amount of funds is no problem

the junior technician completed the work that originally belonged to the senior technician in less time (this is indeed possible). This saving in labor hours is enough to make up for the increase in recurrent expenditure. The final result in this case is a small and favorable deviation. (end)

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