7 - Cost Management, Financial and Management Information Flashcards
What makes up a ‘price’?
Costs + profit margin = price
Your own org can influence the suppliers cost
What are the two common pricing methods?
Fixed Pricing – certainty for buyer, supplier carries risk
Variable pricing – able to cope with changes in cost, securing funding maybe difficult
Why have budgets?
Management tool, enables manager to track progress, plan and support decision making
Planning & Co-ordination, comms & motivation, control
What is Value Engineering (VE)?
Systematic approach to enhancing the value of a project
It identifies ways to reduce costs
What are the phases for Value Engineering?
Information phase > speculation phase > evaluation phase > development phase > presentation phase > implementation phase
What are the 2 types of consortium based procurement?
Vertical alliance – orgs from same industry sector
Horizontal alliance – industries from different sectors
What are the benefits of buying alliances?
Create leverage, price savings, lower acquisition costs, reduced staff costs, opportunities to share market intelligence
What pricing elements need to be shared in open book costing contracts?
Direct Labour, Direct Materials, Other Direct Costs, Indirect Costs, Overhead
Works in collaborative relationships
What are the 3 main types of project control mechanisms?
Cybernetic Control – feedback control/loop
Go/No-go controls – gateway reviews, criteria been met
Post control Review – after an activity has taken place, improve future performance
Name 4 reasons why variations occur
Scope creep Change of schedule Financial problems Contractor problems Project issues Lowest price procurement
What are the 4 methods to resolve contract variation conflicts?
Negotiation
Mediation – 3rd party assistance
Arbitration – 3rd party makes decision
Litigation – legal system/courts
