7 - Cost Management, Financial and Management Information Flashcards Preview

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Flashcards in 7 - Cost Management, Financial and Management Information Deck (11):
1

What makes up a ‘price’?

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

2

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

3

Why have budgets?

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

4

What is Value Engineering (VE)?

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

5

What are the phases for Value Engineering?

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

6

What are the 2 types of consortium based procurement?

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

7

What are the benefits of buying alliances?

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

8

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

9

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

10

Name 4 reasons why variations occur

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

11

What are the 4 methods to resolve contract variation conflicts?

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