...PM 341 Project Cost and Budget Management Winde Chavez Writing Assignment 1.1 Jill Horsley September 17, 2013 Importance of Cost and Value Management When the State of Massachusetts formally assumed control of the Boston CA/T from the Massachusetts Turnpike Authority (MTA), there was a concerted effort to pinpoint the causes of “the most expensive highway project in American history”. The MTA concluded that the project suffered from poor cost management and lack of adequate oversight from the project managers. They key features that define project success are: • Managing cost to achieve efficiencies, and • Creating and enhancing value. These two elements enable project stakeholders to understand the activities and resources required to meet project goals, as well as the expenditures necessary to complete the project to the satisfaction of the customer. The management processes that can help project managers deal with the cost aspects of a project are: • A clear, complete, and unambiguous definition of the project and the scope of work involved • A thorough assessment of the potential risks involved, with well thought out action plans to minimize their possible impact • A well-trained and competent project manager • A thorough understanding, by all stakeholders, of the various types of costs that are likely to be incurred throughout the life of the project • A project organizational culture where there is free flow of...
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...Implementing Earned Value Easily and Effectively Published in Project Management Journal, June 1998 Daniel M. Brandon, Jr., Ph.D. Christian Brothers University School of Business 650 East Parkway South Memphis, TN 38104 Phone: (901) 321-3615 Fax: (901) 321-3566 E-Mail: dbrandon@odin.cbu.edu Implementing Earned Value Easily and Effectively Abstract “Earned Value” is a very powerful approach for the evaluation of true project performance. It also provides a quantitative basis for estimating actual completion time and actual cost at completion. However the effective use of this important technique is rare outside of the US Government and its contractors. There are several reasons for this general lack of use, and the associated implementation problems are discussed herein. This article also presents some methodology and specific techniques to overcome each of these problems, thus providing an effective and relatively easy implementation of earned value. Implementing Earned Value Easily and Effectively “Earned Value” is a quantitative approach to evaluate true performance of a project both in terms of cost deviation and schedule deviation. It also provides a quantitative basis for estimating actual completion time and actual cost at completion. However the effective use of this important technique is relatively rare outside of the US Government and its contractors [4]. It is one of the most underused cost management tools available to...
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...COST AND VALUE MANAGEMENT IN PROJECTS Ray R. Venkataraman and Jeffrey K. Pinto John Wiley & Sons, Inc. This book is printed on acid-free paper. Copyright 2008 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created...
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...Cost & Management Accounting Reporting System -Necessity, Role & Control Framework: An Analysis Management & Cost Accounting Reporting Systems are interwoven in the management processes of all well managed organizations across the globe. The necessity of such reporting systems is going to increase in future as the market-place become highly competitive and organization functions become more complicated and inter-twined. This fact also brings to fore the necessity of a common control framework to monitor this system so that it can contribute effectively and efficiently to the pre-determined organizational goals. What is Cost & Management Accounting Reporting Systems? Cost Accounting Reporting System deals with the process of tracking, measuring, recording and classifying the appropriate allocation of expenditure (financial and non-financial) for the determination of the cost of product or service in an organization and for the presentation of suitably arranged data for the purpose of control and guidance of management ( Horngren et al, 2010). Costs are measured in terms of Direct Costs, Indirect Costs and Overhead / Absorbed Costs. Managers use cost accounting to support decision making to reduce a company's costs of products and services and improve its profitability. Management Accounting Reporting System is concerned with the process of identification, measurement, accumulation, analysis, preparation, interpretation and communication of financial and non-financial...
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... DEGREE PROJECT SUPERVISOR PROJECT TITLE Engineering and Management Practice in UAE and Significance of its Post Economic Crisis DATE KEYWORDS Value Sustainable development Management Literature Review 1.1 Introduction Extensive research has been done on value engineering and value management over the past and as a result different concepts have been formulated and valuable literature has been produced. However, most of this research has been based upon cost effectiveness and other functional issues that have been arising over the past decades and why it is important to focus on this particular aspect. The literature has been reviewed, focusing on various aspects of value engineering and value management and its importance in construction industry, so as to obtain a better understanding as to the role of sustainability in civil engineering. Literature has also been reviewed into what factors lead to the implementation of basic principles of value engineering and value management. 1.2 Value Value is a term which is difficult to define by most scholars. It carries different meaning and weightage for different people. It is commonly linked with product cost or product manufacturing price and service cost (Cheah and Ting, 2005). Typically, it is defined as the ratio of the product worth which it carries for a person and the price he / she pays for it. 100 percent value can be achieved if the product or service received is worth the money which...
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...Highlights cost advantages and distinctive capabilities--the value processes But note that there is no one template. STRATEGIC COST MANAGEMENT - BA122B - Fall 2006 4-1 Value Chain and the QCT Triangle VC allows alignment of processes with customers. This generates a quality advantage. VC focuses cost management efforts. VC provides for efficient processes which improves the timeliness of operations. STRATEGIC COST MANAGEMENT - BA122B - Fall 2006 4-2 Value Chain Benefits Identifies value processes Identifies areas for cost improvement STRATEGIC COST MANAGEMENT - BA122B - Fall 2006 4-3 from Michael E. Porter’s Competitive Advantage SUPPORT ACTIVITIES Firm Infrastructure (General Management) Human Resource Management Technology Development Procurement Inbound Logistics Ops. Outbound Logistics Sales & Marketing Service and Support Value Chain Model PRIMARY ACTIVITIES STRATEGIC COST MANAGEMENT - BA122B - Fall 2006 4-4 Value Chain Elements Customer value added Margin orientation Primary activities Support Activities Inbound logistics Operations Outbound logistics Sales and marketing Service and support Human resources (general and admin.) Tech. development Procurement STRATEGIC COST MANAGEMENT - BA122B - Fall 2006 4-5 Goal of Value Chain Driven by customer perceptions Increase margins Focus on value processess Distinctive capabilities Cost advantages...
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...EARNED VALUE COST MANAGEMENT REPORT TO EVALUATE THE CONTRACTOR'S ESTIMATE AT COMPLETION David S. Christensen, Ph.D. College of Business Southern Utah University 351 West, Center Street Cedar City, UT 84720 Phone: (435)865-8058 Email: Christensend@suu.edu Published in Acquisition Review Quarterly (Summer 1999) BIOGRAPHY David S. Christensen is an Associate Professor of Accounting at Southern Utah University in Cedar City, Utah. After receiving a Ph.D. from the University of Nebraska in 1987, he joined the faculty at the Air Force Institute of Technology, where he taught undergraduate and graduate courses in earned value cost management for over ten years. David is a CPA, CMA, CGFM, and CCE/A, and is active in several professional associations, including the Society of Cost Estimating and Analysis, the American Accounting Association, and the Institute of Management Accounting. Presently, David serves as Associate Editor for the Journal of Cost Analysis. He has published extensively in the area of earned value cost management in Acquisition Review Quarterly, Project Management Journal, National Contract Management Journal, Journal of Parametrics, National Estimator, and the Journal of Cost Analysis. 2 USING THE EARNED VALUE COST MANAGEMENT REPORT TO EVALUATE THE CONTRACTOR'S ESTIMATE AT COMPLETION ABSTRACT The earned value cost management report is a valuable management tool for project managers. Its long association with earned value management systems...
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...MANAGEMENT ACCOUNTING: AN OVERVIEW Learning Objectives Distinguish between managerial & financial accounting. Understand the evolution of management accounting. Explain about the IFAC model. Understand how managers can use accounting information to implement strategies. Explain about Relevant Lost & Relevant Regained. 2 Learning Objectives Distinguish between managerial & financial accounting. Understand the evolution of management accounting. Explain about the IFAC model. Understand how managers can use accounting information to implement strategies. Explain about Relevant Lost & Relevant Regained. 3 Accounting System (accumulates financial and managerial accounting data) Managerial Accounting Information for decision making, and control of an organization’s operations. Internal Users Financial Accounting Published financial statements and other financial reports. External Users Managerial Accounting Users of information Managers within company Regulation Financial Accounting Interested outside parties Required. Must comform to Not required because for internal GAAP which is regulated by use only FASB and SEC. Basic accounting system plus Almost exclusively from the Source of Data various other sources basic accounting system Reports often focus on subunits. Reports focus on the enterprise Nature of Reports Based on a combination of in its entirety. Based on and...
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...MANAGEMENT ACCOUNTING & PERFORMANCE EVALUATION MAF 635 (Activity-Based Management) PREPARED BY: ANIS ASMIDAR BT ZAMANI (2009602144) AZIZAL BIN HAMZAH (2009693746) MUHAMMAD HAKIM B TUKEMIN (2009866018) GROUP: BACC 8C PREPARED FOR: PUAN ELEY SUZANA BINTI KASIM TABLE OF CONTENTS No. | Content | Page | 1.0 | Acknowledgement | 1 | 2.0 | Introduction | 2 | 3.0 | Differences between ABM and ABC | 3 | 4.0 | Type of ABM | 4 | 5.0 | Output of ABM | 5-7 | 6.0 | Summary | 8 | 7.0 | References | 9 | 8.0 | Appendix | | 1.0 ACKNOWLEDGEMENT We have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals. We would like to extend our sincere thanks to all of them. We are highly indebted to PuanEleySuzanaKasim our MAF635’s lecturer for her guidance and constant supervision as well as for providing necessary information regarding this project & also for her support in completing this project. We also would like to express our gratitude towards our parents & also our classmates for their kind co-operation and encouragement which help us in completing this project. Our thanks and appreciations also go to the group members in developing this project and people who have willingly helped us out with their abilities. 2.0 INTRODUCTION The Chartered Institute of Management Accountants (CIMA) has stated that an activity-based management (ABM) is a process...
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...Based Management Activity Based Management Executive Summary: Management practices and methods have changed over the years and the organizations are moving to managing vertically to managing horizontally i.e. to move from functional orientation to horizontal orientation. TQM, JIT, BPR are all examples of horizontal management improvement initiatives. However management systems have lagged significantly in tracking and providing information about the horizontal aspects of business and Activity based costing /Activity based management mirrors this horizontal view. The focus of ABC is to provide accurate information about true costs of products, services, processes, activities etc. Activity based management makes this cost and operating information useful by providing value analysis ,cost drivers and performance measures to initiate, drive and support improvement efforts and to improve decision making abilities. This report deals with the application of ABM in American Seating company. Company was faced with increasing competition and it wanted to become a cost leader. The company lacked the information about true product and services cost to decide on which business areas to pursue. Company implemented ABM to conduct a detailed analysis of its activities and more accurately mirror resource consumption by process, product and customer. Company successfully identified customer profitability differences and achieved 40 % reduction in order processing costs. ABM was...
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...Towards a conceptual framework for strategic cost management - The concept, objectives, and instruments - Von der Fakultät für Wirtschaftswissenschaften der Technischen Universität Chemnitz genehmigte Dissertation zur Erlangung des akademischen Grades Doctor rerum politicarum (Dr. rer. pol.) vorgelegt von Ibrahim Abd El Mageed Ali El Kelety geboren am 11.01.1965 in El Menoufia - Ägypten eingereicht am: 14. Juni 2006 Gutachter: Prof. Dr. Uwe Götze Prof. Dr. Dr. h.c. Jürgen Bloech Prof. Dr. Peter Schuster Tag der mündlichen Prüfung: 18. Juli 2006 Acknowledgement To the Almighty God “ALLAH” Who have granted me all these graces to fulfill this work and Who supported me in all my life. To Him I extend my heartfelt thanks. It is a pleasure to express my sincere and deepest heartfelt gratitude to my “Doktorvater“ Prof. Dr. Uwe Götze for his kind supervision, continuous encouragement, valuable enthusiastic discussion and unfailing advice throughout the present work, as well as financial support during my latest period of study in Germany. He assisted in all matters, provided solutions to different problems. Prof. Dr. Uwe Götze supported and helped me during my learning period in Germany and writing this thesis. I am very lucky being one of his students. I would like to express my deep thanks to Prof. Dr. Dr. h.c. Jürgen Bloech - Georg-August University of Göttingen - for his kind acceptance to act as an examiner. I would also like to express my sincere thanks to Prof. Dr. Peter...
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...2 Value Chain Management The theoretical background is defined around the central term value chain. Chapter 2 presents research concepts to manage the value chain structured by their area of specialization either on supply, demand or values. Secondly, within an integrated framework, the results of the specialized disciplines are combined with the objective to manage sales and supply by values and volume. Value chain management is defined and positioned with respect to other authors’ definitions. A value chain management framework is established with a strategy process on the strategic level, a planning process on the tactical level and operations processes on the operational level. These management levels are detailed and interfaces between the levels are defined. Since the considered problem is a planning problem, the framework serves for structuring planning requirements as well as the model development in the following chapters. 2.1 Value Chain Value chain as a term was created by Porter (1985), pp. 33-40. A value chain “disaggregates a firm into its strategically relevant activities in order to understand the behavior of costs and the existing and potential sources of differentiation”. Porter’s value chain consists of a “set of activities that are performed to design, produce and market, deliver and support its product”. Porter distinguishes between • primary activities: inbound logistics, operations, outbound logistics, marketing and sales, service in the core value...
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...ARTICLE: Value chain analysis in interfirm relationships: a field study and Interorganizational cost management and relational context. Introduction A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of the independent activity's value. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter, as a profession, can be used to illustrate the difference of cost and the value chain. The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the business, e.g. ISO 9001. Diagram 1 The goal of these activities is to create value that exceeds the costs of providing the product or service and next generating a profit margin. A Value Chain Analysis (VCA) has five parts including: a) inbound logistics; include the receiving, warehousing, and inventory control of input materials. b) Operations;...
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...Activity-based management in a small company 1. What are the major benefits of activity-based management? ABM provides utilizes value analysis, cost drivers and performance measures in order to improve the decision making processes of the organization. Major benefits include – a) ABM provides a formal management system in understanding the contribution to achieve strategic objectives of the organization. b) It helps managers in emulating best practices and establishing process controls ensuring consistently good performance. c) It supports continuous improvement by providing managers with new insights into value adding and non-value adding activities and business processes 2. Why managing operations and activities is not a custodial task? Managing operations and activities is a continuous improvement process rather than being a custodial task. A structured approach to continual improvement is shown in the figure below: 3. How activity-based costing works with activity-based management? ABC is not a method of costing, but a technique which measures the cost and performance of activities, resources and the objects which consume them in order to generate more accurate and meaningful information for decision-making. It helps in gaining a thorough understanding of the business processes and cost behaviour. ABM, on the other hand, utilizes this information to manage activities and make informed decisions about lines of business, product mix, processes and product...
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...Statements on Management Accounting PRACTICE OF MANAGEMENT ACCOUNTING TITLE Value Chain Analysis for Assessing Competitive Advantage CREDITS This statement was approved for issuance as a Statement on Management Accounting by the Management Accounting Committee (MAC) of the Institute of Management Accountants (IMA). IMA appreciates the support of The Society of Management Accountants of Canada (SMAC) in helping create this SMA and extends appreciation to Joseph G. San Miguel, of the Naval Postgraduate School, who drafted the manuscript. Published by Institute of Management Accountants 10 Paragon Drive Montvale, NJ 07645-1760 www.imanet.org Special thanks are due to Randoif Holst, SMAC Manager, Management Accounting Guidelines, for his continuing project supervision and to the members of the focus group (including MAC members Dennis Daly and Thomas Huff) for contributing to the improvement of the final document. Copyright © 1996 Institute of Management Accountants All rights reserved Statements on Management Accounting PRACTICE OF MANAGEMENT ACCOUNTING Value Chain Analysis for Assessing Competitive Advantage TABLE OF CONTENTS I. II. III. IV. Rationale . . . . . . . . . . . . . . . . . . . . . . . 1 Scope . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Value Chain Defined . . . . . . . . . . . . .1 Competitive Advantage and Customer Value . . . . . . . . . . . . . . . . . . .2 V. The Role of the Management Accountant...
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