As work is performed and measured against the baseline the corresponding budget value is “earned”, consequently Earned Value metric cost and schedule variances can be determined and analyzed, from these basic variance measurements the project manager can identify significant drivers forecast, future cost and schedule performance and construct corrective action plans to get the project back on track. Earned Value Management therefore encompasses both performance measurement (i.e. what is the program status) and performance management (i.e. what we can do about it). Earned Value
The forecasted cash outflow and inflow for every period must be recognized and additionally the expected discount rate in order to compute NPV. In spite of the fact that the correct value can be identified after project completion but reasonable appraisals can be made by taking a gander at the execution of comparable projects. NPV formula as below where Ct is net cash inflow, Co is total investment, r is discount rate and t is no. of years. The NPV technique empowers companies to change in accordance with the difficulties of working with constrained financial resources.
Master Budget Elements A master budget is an expectation, or a statement based on sales, volume etc. for an upcoming period (Shim, J. K., & Siegel, J. G. (2012). The master budget contains a pro forma income, a pro forma balance sheets, and a cash budget. Generally, a master budget is a plan or standard at the beginning, but it ends up amounting to a control device that helps to measure plans for management. This also helps management improve future performances.
Implement new solution: Create an implementation timeline that outlines your plan to incorporate those new solutions into an effective DRP. 5. Distinguish recovery time objectives (RTO): If any systems cause failure then RTO helps to those systems to restore faster and easily. 6. Perform a business impact Analysis (BIA): BIA helps to measure or determine how many systems is affected and estimated the cost to recover it, with its downtime.
The key stages in activity based budgeting are to: Identify the organisation 's activities; Determine the cost drivers; Spread departmental costs to costs drivers; Calculate budgeted activity levels. The potential advantages of the activity based model are that: It identifies the cost of activities; It allows for resource allocation at different activity levels; It establishes a link between decision making and cost behaviour; It fits in with control systems.
• Work performance reports – These reports organize and summarize the information through the work performance data. To determine the recognition and to award for the team members, and to plan the future human resource needs on the project, this information can be used. These are the actual values to determine the variances from the baseline plan. • Organizational process assets – Organizational policies procedures and guidelines, historical information and lessons learned from the previous projects are consider to be the organizational process assets. These can be use as the templates for certificates of appreciation, newsletters, websites, bonus or other incentives.
The responsibility of project manager is how to deal with resource, people and systems to deliver the end products within the budget and deadline allowed. The project manager is required to have skills such as planning, negotiating, communication, leadership, problem solving. Especially, the project manager must be adaptive to new circumstances by gaining form experience that is measured form the number of projects previously managed and a responsible index. “The responsibility index indicates whether the value of actual project is lower, higher, or equal with the value of previous project. “ (Couillard, 1995).
This is where the company accepts the final project. An evaluation will be needed in order to highlight if the project was a success or failure (Project Insight, n.d.). If the project was unsuccessful, there will need to be information given about why it failed so that errors will not occur during the next project. As noted above, there are many different parts of project management. The scale, significance, and complexity of a project need to be considered when doing project management in order to determine how the project will be handled and what the development of the end product will be.
There are two options of payment types the company could consider; Progress payment and performance based payment. Progress payments are based on the cost incurred by the contractor as work progresses under a contract, which would not work for the company. Performance based payment are an alternative to progress. Performance based payment offer a opportunity for “win-win” financial arrangement with the government. “It is important to remember that the fundamental purpose of all contract financing is to assist the contractor in the paying the cost it incurs in the performance of the contract and, per FAR 32.1004(b)(2) (i), to do so “only to the extent actually needed for prompt and efficient performance” (Defense Procurement and Acquisition Policy).