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Project Cost Control - Essay Example

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Summary
Realizing its importance, all the major multinational companies and corporations adopt strategies for the purpose of minimizing the costs.
The first and foremost…
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Project Cost Control
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Controlling the costs within the project serves as the pivot towards the overall success or failure of the project. Realizing its importance, all themajor multinational companies and corporations adopt strategies for the purpose of minimizing the costs.
The first and foremost strategy that must be devised towards the cost control is to identify the areas and domains within the organization and project that lead to the incurring of costs. The definition of costs is also imperative as often activities are taken for granted which amount to costs in the actual terms. Costs are defined as anything that does not add value to the system rather consumes resources, capital, time or other related functions and components of the project.
Steve Odland, in his assessment of the methods by which the costs may be controlled defines the interaction with the customers as one of the reasons based on which the costs can be controlled. According to his views, the customers provide sufficient information and guidelines regarding the utility based projects and items and those that do not add value or are little needed and desired by the customers. The response of the customers enable knowing what to produce and what to avoid in the future trends and projects (Odland, 2012).
Another area that is often termed as a serious point with regard to the handling of the costs is the inventory. Inventory often takes up large amount of resources and material. Many companies and projects fail only because of the bulk of the inventory in stock. The stocks lead to consuming space, budget and other associated items which result in the non production of the productive items and products that would otherwise be kept and reserved in limited quantity (KACHWALA, 2009, p. 92).
Identifying the defective products, processes and all those activities and components that lead to the consumption of resources, energy and material are amounted to as costs. The time and resources spent would otherwise be spent in the production of the new items and material.
Adhering to the terms and conditions that are set forth in the early phases of the project and overall organizational tasks are also important. Often the lag incurs on the account of the deviation from the initially set forth conditions based on which the project had been started. The failure to do so results in delay. It also results in the extra resources usage and many more associated functions and discrepancies within the system and project at hand.
Transportation means and communication sources are few of the sources that often lead to the excessive expenses and costs that are spared from the budget and used on the items that do not add any value to the end product or service.
Financial controls are one of the aspect through which the costs and inventory can be controlled. Sub division of budget and spreading the budget in chunks preventing invisible processes and activities are few of the steps through which the costs can be controlled and organizations can flourish.
References:
KACHWALA, T. T. (2009). Operations Management and Productivity Techniques. PHI Learning Pvt. Ltd
Odland, S. (2012, Feb 15). 5 Ways To Control Costs. Retrieved from Forbes: http://www.forbes.com/sites/steveodland/2012/02/15/5-ways-to-control-costs/ Read More
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