Week 3 Discussion Board
Weekly Discussion Question – (25 points)
Situation – During the status meeting for this project yesterday, your Program Manager let you know the DIT COO had mentioned to her that he had heard favorable comments from his project managers about your project management presentations. You explained to her you have been following a progression of instructions leading to the creation of a Cost Management Plan Template for DIT to help the project managers with planning and controlling the cost of their projects. She agreed and asked you to tell her what you know about Project Cost Estimating Methods and Techniques.
Assignment – As you know, the challenge with estimating is that it always involves some uncertainty. Even the most seasonal project manager is sometimes intimidated by cost estimating.
This week discuss some of the main factors that contribute to “uncertainties” that make cost estimation difficult. Provide 5 — 6 direct examples of how these uncertainties are associated with the current project.
Week 3 Discussion: Cost Control in Projects
There is various uncertainty that takes place and makes cost estimation difficult some of the uncertainties are stated below-
Structural complexity– One of the main factors of the uncertainties is structural complexity. It is often seen that the structure of the organization is monitored goods and it makes it difficult to make the correct cost estimation. Due to the structural issue, it is difficult to understand how the future fit together and how interdependencies pose risk and uncertainties. The main issue is these uncertainties lead to not proper estimation of the cost of the project. The issue arises in how the project fits together and this can be one of the uncertainties.
Technical complexity– The other uncertainty that takes place in the project is the technical complexity. There is various technical issue that takes place while making the project. The design of the process or the project can be considered to be one of the issues that can take place (Tobechi, Chioma & Ezinne, 2022, p.37). The technical or technology issue in the project creates one of the uncertainties that make it difficult to cost estimation of the project. There can become a case where it is not able to find the exact cost of the project t which might take place.
Directional complexity– The other complexity that takes place in these projects is the direction complexity. There are cases where the people in the organization do not know what the next things, they need to do are so that the project can be completed properly. The proper motivation is provided to the people and with that, the proper guidance is also required and for that, the cost estimation makes it difficult as the actual cost did not come out which is provided for the training and the development of the employees in the organization as well.
Market condition- The other issue that makes the cost estimation difficult is the market condition. There are several circumstances where it is difficult to estimate the market. There are several times that the prices of the product increased and the actual estimation came to a halt. It can be said that there are cases where the increase in prices in some of the products makes it difficult the properly estimate the product as well. As the proper prices cannot be known which are to be estimated. There is a chance that in some places the prices are high and, in some products, the prices are the same so uncertainties are created here as well.
Construction material cost– The other uncertainty that can take place in the organization is the construction material cost. It is often seen that the construction cost of the project is quite higher than expected and due to the transduce increase in the price of the raw material the project price changes and uncertainties take place in how to find out the exact amount which should be invested in the organization (Son & Khwaja, 2022, p.5). It can be said that mostly the issue arises because of certain changes in the prices which make the proper cost estimation difficult as well.
All the uncertainties are relayed to the project and for that, the example is also provided which is stated below-
Firstly, it is seen that due to the structural complexity, the work cannot take place properly and the delay in the work leads to the rise of the price of the project and makes the calculation hard.
Secondly, if the technical items do not run properly then more investment is required which makes the change in budget and leads to issues in the calculation.
Thirdly due to the directional complexity, the people did not understand what work to perform, and the delay in the work took place which led to more investment in labor and the prices also changed.
Fourthly- Market conditions changes take place in various situations and h lead to more rise main the prices bad nonavailability of resources as well. This is one of the reasons for the issue of cost estimation.
The other example is the material cost as it has often been seen that the cost of material changes and with that the prices of the product get affected and leads to the change in the product as well as the problem in the estimation of the project.
Son, J., & Khwaja, N. (2022). Developing a Preliminary Engineering Cost Estimation Method for a Portfolio of Bridge Construction Projects in the Project Planning Phase. Transportation Research Record, 03611981221083912.
Tobechi, E. B., Chioma, E. P., & Ezinne, O. J. (2022). Evaluation of the Effects and Risks of Cost Estimation on Project Costs and Claims: A Study in Imo State, Nigeria. International Journal of Environment, Engineering, and Education, 4(2), 36-47.