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What are the major types of costs Which costs are controllable by the project manager?
Estimating the cost of a project varies based on the industry, the type and scope of the project undertaken and the time frame for completing the project. While the variables of any given project may change according to circumstances, there are four main elements of project costing found in most all project cost estimations. a. pre-planning b. material costs c. human resources d. operating costs
What is the difference between estimated cost and actual cost?
Estimated cost is the budgeted cost according to the original Project Management. Actual cost represent the actual payments (actual cost of the project). Your question seems related to earned value analysis, which is essentially comparing the budgeted cost/hours against the actual cost/hours.
Importance cost management in a project?
Cost Management is critical to Project Management. A project cannot be initiated with Cost Management not in place, since cost management is about estimating, budgeting, monitoring, and analyzing the cost information.
What is the Difference between cost management cost control and cost reduction?
Cost Control simply means keeping cost within desired level or planned level and the essential mechanics of Cost control is budgeting and budgetary control. Cost reduction on the other hand is a deliberate attempt to lower the cost of business operation which in most cases could result in value trade-off. Cost Management however is that planned, organised, systematic cost restructuring programmes aim to ensure that cost is commensurate with the level of operation of an organization. It can also be defined as the planned effort to ensure that organization operates within cost effective and efficient zone without compromising quality or value. Therefore the key line dividing cost reduction and cost managemnet is the issue of value or quality. In the process of Cost Management Cost would be reduced but without compromising value but not all cost reduction process guarantees value retention. The success of any cost management effort is influenced by the cost management mindset and cost management technical skill capacity of the Manager. Today, given the importance of cost to the survival of organization, it has been advocated that there should be adequate capacity building in the skill to manage cost as well as a full institutionalization of the distinct practice of cost management as a discipline. This I subscribe to.
What is Project cost control vs approved budget in project management?
Project cost control is comparing the actual project cost against planned project cost.
Example of controllable cost and uncontrollable cost?
Controllable costs are costs that a manager or department has authority and responsibility over, such as direct material cost. With uncontrollable costs, management has no control over the cost or when they must be paid, such as liability insurance.
Is depreciation a controllable cost?
No. Depreciation would be considered an uncontrollable cost because it is fixed
Difference between controllable and uncontrollable cost?
1.11.5 By Controllability- Costs here may be classified into controllable and uncontrollable costs. (a) Controllable costs - These are the costs which can be influenced by the action of a specified member of an undertaking. A business organisation is usually divided into a number of responsibility centres and an executive heads each such centre. Controllable costs incurred in a particular responsibility centre can be influenced by the action of the executive heading that responsibility centre. For example, Direct costs comprising direct labour, direct material, direct expenses and some of the overheads are generally controllable by the shop level management. (b) Uncontrollable costs - Costs which cannot be influenced by the action of a specified member of an undertaking are known as uncontrollable costs. For example, expenditure incurred by, say, the Tool Room is controllable by the foreman incharge of that section but the share of the tool-room expenditure which is apportioned to a machine shop is not to be controlled by the machine shop foreman The distinction between controllable and uncontrollable costs is not very sharp and is sometimes left to individual judgement. In fact no cost is uncontrollable; it is only in relation to a particular individual that we may specify a particular cost to be either controllable or uncontrollable
Is payroll cost a controllable cost?
payroll is not controllable cost.
Are raw materials a controllable or uncontrollable cost?
Raw materials are typically considered an uncontrollable cost because their prices are set by external factors such as market demand and supply. While a company can negotiate with suppliers or seek alternative sources, they have limited control over the overall price of raw materials.
Are all fixed expense controllable or uncontrollable?
"Controllable by whom?" should be the first consideration.A controllable expense is one that the manager responsible for controlling that particular expense has some influence over. So if you look at any given fixed expense, it may be controllable by manager X, while it is uncontrollable by manager Y, if Y has no control over it.In the short run, fixed costs may be controllable ORuncontrollable.If the fixed expense is discretionary (for example, a fixed budget of $500 a year for his department's annual summer outing), the manager can cancel the outing without affecting production (except to the extent that department morale is affected, and that is not a measurable accounting cost.). The $500 would be a fixed controllable cost to the manager, because he can avoid the expense entirely by cancelling the outing.However, the amount of monthly rent paid on a factory building is usually a fixed cost that the factory manager cannot change, and so it is a fixed uncontrollable cost to the manager because it is non-discretionary for the manager.The major purpose of dividing variable and fixed costs into "controllable" and "uncontrollable" costs is to aid in evaluating a manager's performance, in order to to hold him responsible only for controlling the expenses that he or she could have controlled, i.e., those expenses that he or she had both the responsibility and the authority to control.
What is cost controlling?
By reduction in operating items and using recycle items then we can control cost by using those resources which we already used it example if the guest used half shampoo, and he threw it but at the same time if we collect it in large quantity and we refill it it reduce the cost.
Is electricity cost a controllable cost?
Electricity cost not a controllable cost. The manager cannot influence this type of expense. To the extent where a cost cannot be managed it is indeed a non controllable, now for electricity, to the extent where consumption can be raised or lowered it becomes a controllable cost. If the consumption can be optimized through processes or equipments it then is a controllable cost.
What is uncontrollable cost?
Uncontrollable cost is that cost which is not in descretion of management to be controlled. A good example of an uncontrollable cost is insurance. A manager who runs a department on the factory floor does not have control over the liability insurance that the company buys.
What are cost that the manager has the power to determine or atleast strongly influence?
controllable cost
What is the difference between discretionary and controllable cost?
Discretionary cost is that amount which is at somebody's discretion like manager etc. Controllable cost is that amount which is in the hands of management to be controlled or not like advertisement expenses etc.
What is an example of Uncontrollable cost for hotel?
rent is one example of it.
