7 - Cost Management, Financial and Management Information Flashcards Preview

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Flashcards in 7 - Cost Management, Financial and Management Information Deck (11):

What makes up a ‘price’?

Costs + profit margin = price
Your own org can influence the suppliers cost


What are the two common pricing methods?

Fixed Pricing – certainty for buyer, supplier carries risk
Variable pricing – able to cope with changes in cost, securing funding maybe difficult


Why have budgets?

Management tool, enables manager to track progress, plan and support decision making
Planning & Co-ordination, comms & motivation, control


What is Value Engineering (VE)?

Systematic approach to enhancing the value of a project
It identifies ways to reduce costs


What are the phases for Value Engineering?

Information phase > speculation phase > evaluation phase > development phase > presentation phase > implementation phase


What are the 2 types of consortium based procurement?

Vertical alliance – orgs from same industry sector
Horizontal alliance – industries from different sectors


What are the benefits of buying alliances?

Create leverage, price savings, lower acquisition costs, reduced staff costs, opportunities to share market intelligence


What pricing elements need to be shared in open book costing contracts?

Direct Labour, Direct Materials, Other Direct Costs, Indirect Costs, Overhead
Works in collaborative relationships


What are the 3 main types of project control mechanisms?

Cybernetic Control – feedback control/loop
Go/No-go controls – gateway reviews, criteria been met
Post control Review – after an activity has taken place, improve future performance


Name 4 reasons why variations occur

Scope creep
Change of schedule
Financial problems
Contractor problems
Project issues
Lowest price procurement


What are the 4 methods to resolve contract variation conflicts?

Mediation – 3rd party assistance
Arbitration – 3rd party makes decision
Litigation – legal system/courts