Lecture 5 Flashcards
What is a cost model?
Algorithms/equations used to estimate the cost of a project
What is the aim of Cost estimate relationships CERs?
CERs utilise the best cost models to make decisions about costings
What are Global pricing strategies GPs
GPs are used to design a baseline (selling price or equivalent) which is most advantageous for sales, considering not only profit but the competitor market.
The baseline is designed to meet customer requirements and cost targets.
What five factors play an important role in strategic planning and pricing models?
- man-loading schedules per department
- monthly costs per department
- monthly material expenditure
- cash-flow and man-hour requirements per month
- monthly and yearly total program costs (important, usually done by an accountant - high cost)
Key cost summary points (5)
- Labour costs,
- Distribution
- Overhead rates
- Material
- Support costs
Life Cycle costs are what?
The total cost of acquisition and ownership of a product
What 5 main factors make up the life cycle costs?
- R&D (feasibility study, design and development, testing of models)
- Production costs (operation, fabrication, training)
- Construction costs (new or upgraded facilities)
- operation and maintenance costs
- Product retirement and phase-out costs
What do R&D costs include?
feasibility study, design and development, testing of models
What do production costs include?
operation, fabrication, training
What types of things are phase out costs?
- spare parts which still need to be produced for the product
- cost with disposing of equipment and machinery
What are Cash-flow statements?
a series of statements documenting the cash-flow in and out of the business, usually on a monthly basis. these accumulate over the whole project and can be used as a planning tool or progress analysis system
Cash-flow statements combine 5 aspects what are these?
- WBS
- the estimate
- project schedule
- procurement schedule
- resource histogram
The basic idea of a Cash-flow envelope system is what?
To give yourself a budget for a set (usually monthly) time period and this budget should not be exceeded
what is the point of using a cash-flow envelope
it takes into account the timing of the cash-flow, so where the overall balance is positive yet the cash-flow is negative due to payments/expenses etc can be accounted for. A +ve cash-flow will not be mistaken for a -ve one due to the cut of dates of the period.
What graph is often used to display the cash-flow?
S curve analysis
