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CONTROL
Performance measurement helps in:
- knowing the progress against goals
- identifying opportunities for improvement
- compare the actual performance to standards
It is a fundamental building block of TQM
Measurement of performance is a tool for effective
management and improving the process
The parameters of performance measurement are
output, raw materials consumption, power
consumption per unit of production
PERFORMANCE
CONTROL MODEL
Define
Mission
Initiate
project
Input and
Improve output
assessment improve
processess
Lessons proceed
learned
Project
execution improve
Input and
output
assessment
processess
proceed
Out comes
Assessment Project
processes completion
A performance measurement system should
have:
Defined and actionable goals
Certain performance measures to see that these
goals are being met
Baselines from which progress can be measured
Accurate data
Feedback system
Schedule control
Schedule control
The corner stone of the well managed project is the
scheduling which is the tool that identifies and
organizes project tasks.
the process of building the schedule :
Enables the project to identify risk points.
Understand proper linkage of various events
Establish goals
Methods used for forecasting completion
time of activities
Methods used for forecasting completion time of
activities are similar to those which is used for cost
forecasting.
E.g.- Df =wht
E.g.:- planned versus actual progress over time on
project schedule control is control is concerned with :-
1. current status
2. managing actual charges
3. determining the changes in the project.
Types of project schedule control
Predictive Preventive
schedule schedule
Project mangers needs to watch the following
areas carefully in order to prevent delays.
Building up the project team
Import license
Infrastructure facilities
Release of funds from financial institutions
Commissioning
Cost control
Application of (1) investigative procedures to detect variance of
actual costs from budgeted costs, (2) diagnostic procedures to ascertain
the cause(s) of variance, and (3) corrective procedures to effect
realignment between actual and budgeted costs.
Steps taken by management to assure that the cost objectives set down
in the planning stage are attained and to assure that all segments of the
organization function in a manner consistent with its policies.
For effective cost control, most organizations use standard cost system ,
in which the actual costs are compared against standard costs for
performance evaluation and the deviations are investigated for
remedial actions.
Cost control is also concerned with feedback that might change any or
all of the future plans, the production method, or both.
Good cost management
Project Cost Management describes the processes
required to ensure that the project
is completed within the approved budget. It
consists of resource planning,
Cost estimating,
cost budgeting
Project cash flow
Direct labour testing
Cost estimating
An estimate is a calculation of the quantities of various
items of work, and the expenses likely to be incurred
there on.
The total of these probable expenses to be incurred on the
work is known as estimated cost of the work.
The estimated cost of a work is a close approximation of
its actual cost. The agreement of the estimated cost with
the actual cost will depend on accurate use of estimating
methods and correct visualization of the work, as it will
be done. Importance of correct estimating is obvious.
Types of Construction Estimates:
1.Approximate estimates
2. Detailed estimates
The cost of brickwork in a building would be
determined as below:
i ) Cost of Materials at
the source
1. Bricks $
2. Sand $
Cement $
ii) Cost of Handling and $
transporting above
materials
3. Cost of Labor, both $
skilled and unskilled
Cost of plant $
4. Overheads $
Profit $
Total Cost of Brickwork $
COST ACCOUNTING
The cost accounts described in the previous sections provide only
one of the various components in a financial accounting system.
Before further discussing the use of cost accounts in project
control, the relationship of project and financial accounting
deserves mention. Accounting information is generally used for
three distinct purposes:
Cash
Position
Direct labour testing
Labour Rate Variance is the difference between the
standard cost and the actual cost paid for the actual
number of hours. Labour efficiency variance is the
difference between the standard labour hour that
should have been worked for the actual number of
units produced and the actual number of hours
worked when the labour hours are valued at the
standard rate.
Overhead rate
costing
Actual (or budgeted) overhead cost for a given period
divided by actual (or budgeted) measure of production
activity (such as direct labor cost, labor hours, or
machine hours). It expresses overhead costs in terms of
a related-base for allocating them over a given period.
Also called predetermined overhead rate when using
budgeted costs.
Cost
control
problems
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