Project cost is a critical aspect of the project, first, the cost plan is the most important part for investors to make sure they are going to make a profit at the end of the project. It also determines the life span of the project, based on providing the personnel and the material necessary to start the project. What are some reasons that increase the cost of the project, and how to avoid them?
The budget will determine critical decision points such as the design used. The team that will develop and deliver the project end-to-end or helps with a few elements or who work for a smaller budget. The size of the project? What should the quality of things be needed for the project? There has to be a predefined budget; Otherwise, it will be difficult to answer these questions. It becomes impossible to properly assess the progress in the right direction once the project is underway.
The cost of each task within a project, which as already mentioned in this thread, can directly relate to the duration of each individual task. Therefore, certain costs, such as earned value, play a big part in judging whether or not a project is on track. All details regarding the duration, cost, and personnel/equipment of each task should be organized and laid out in the planning phase. There is a plethora of things that can go wrong during the course of a project that can result in project delays. These delays are typically accompanied by cost increases and going over the budget. Some examples that can increase a project's budget include material failure, ordering the wrong materials, not ordering the materials on time, etc. Not all of these problems can be avoided at all times, but being as prepared as possible for these potential delays and accounting for possible issues that may arise within the schedule and budget can help prevent any major changes to the project's schedule budget in the long run.
Unexplained costs can be expected or unexpected increases the cost of materials, equipment, labor, or overhead that includes administrative, finance and legal costs. This can be shielded by employing building reserves and regular checks on suppliers and materials contracts and buyer patterns that influence supply and demand costs. Project budget and spending outlooks should be monitored constantly. Breakdowns in communication among any two people involved in the projects including miscommunication between the project manager and key employees with important roles in a project. This can be shielded by keeping the project plan that is clearly organized, near and available to others involved. Status meetings once a week would also be of help. Changes in project scope include projects that grow overtime; with growth comes cost increases. To shield against these cost overrun set strict rules about the degree of change that is acceptable and by what date. And finally under estimation of the complexity of the project includes hidden surprises that drive cost increases. This can be shielded by having experts do an initial review of the project, take notes on similar projects and break the projects down into manageable phases to reduce cost increases.
Earnestly, there is no way to budget a project exactly at the beginning. There is too many variables that can change where even when one project that is similar to the new one, the budgets will not be the same. There are costs for new manufactures, prototypes, and other innovative processes like new coatings that all have a certain cost to them that are part of the engineering process. The best way to keep down cost is to leverage what is already within other projects (without cannibalizing the previous products) and create innovations that will reduce cost and increase efficiency (albeit that is easier said than done). One large cost can also come out of the marketing collateral you may want to produce to show off the new products and any other test data needed to prove to the customer on why that product is superior to others on the market. There is also cost to ensure the new products are tested accurately and are iteratively prototyped without a full redesign unless necessary. Overall, avoiding cost can be done by using previous data and manufacturing processes as legacy products used, but there is always a cost for innovation that is necessary for the evolution of the company's portfolio.
Project cost always changes with time and that is why there is always a capital or a budget for each project that would give some buffer to that cost increase. Cost always increases if the project is dragging for whatever reason, including delays caused by failures, operations readiness, or regulatory pending registrations. The company keeps losing money if the project gets delayed, whether it is a new product development or a sustaining project. For new product development, the earlier the product gets launched the earlier the company is going to start earning and recover from that project cost until the company starts to make profit. For sustaining projects, most of those sustaining projects are cost effective projects which would need to be executed as soon as possible to start saving on that product. The more time the project takes the more cost it is going to have, due to prices of machinery or expenses going up, since when the projects sits around it automatically costs more money. Another aspect is failures; whenever failures happen, usually some testing has to be re-executed, which causes the creation of more samples. If those testing are related to drug compatibility that costs even more since those drugs cost a fortune and would increase the cost of the project. Many factors play a role in the increase of the project cost. As other posts highlight, the team has to optimize the results of the project by spending the most time on the research/initiation stage in order to collect the most information. Scheduling very detailed phase review after each phase would allow the team to make sure that the project is being set up for success. If everything goes as planned in terms of testing and readiness with no delays then there is no reason to increase the project cost.
I agree that project cost can never be accurately established at the beginning of the project. There are factors that may come up that may not have been planned for in the beginning of the project. Increase in project cost can happen when there are unexpected setbacks. From personal experience, an increase in project cost came from the need to replace a piece of equipment that did not work as efficiently as the team had initially thought it would in the beginning, which ended up causing delays. Manufacturers know the capabilities of their equipment so this could be avoided by communicating to the manufacturers what you intend to use the equipment for before purchasing it. Increase in project cost can also be from other issues that are out of the company's control like increase in cost of services or supplies. There may not be a way to avoid such setbacks, even if the team could plan the budget to accommodate for any extra expense that may arise from any unexpected issues, so in this case, it is important to sit down with the team to discuss possible solutions like purchasing from a different supplier.
Project cost is a critical aspect of the project, first, the cost plan is the most important part for investors to make sure they are going to make a profit at the end of the project. It also determines the life span of the project, based on providing the personnel and the material necessary to start the project. What are some reasons that increase the cost of the project, and how to avoid them?
I think good communication between interacting departments is a critical point when it comes to maintaining the cost of a project. At the company I work for, we experienced this when developing a new component to use for manufacturing.
For background, my department interacts mainly interacts with customers and transitions projects to our internal manufacturing department, or in some cases, to the customer's manufacturer. The interactions between my department and our internal manufacturing departments are new as the manufacturing department is new to the company, about 2 years running now.
The component I designed for manufacturing didn't have quality input from manufacturing, even though manufacturing participated in the development of the design. As a result, there are certain aspects of the design that make it difficult to use in manufacturing. These flaws weren't found until the injection molds were purchased and made.
Fixing the design flaws would double the price of the project, as it would require an entirely new mold. Because of that, the project has no deliverable, and in order to get the deliverable, the project would go over the budget allowed. To avoid this in the future, I would request that manufacturing plays a more critical role in the design of the component, the ball was dropped in this aspect as they gave the 'ok' for the design without realizing its flaws
Risk management and agile project management are two things that come to my mind when thinking of cost overruns. In most cases, cost overruns occur due to unexpected expenditures which most of the time are resulting from unassessed risks in a project. Short-term deliverables, having enough gaps in the schedule for identifying any issues and good communication are part of agile project management that can help get you back on budget.
Several things come to mind that may increase the cost of the project such increase in project scope, or even increase the resources needed can cause the overall budget to increase. However there are several such things which we can list, but speaking from past experience and the lesson we have learned so far proper risk management could be crucial reason as to why project budget might subject to increase. In several cases increase project cost occurs as a result of unexpected expensing such as the one mentioned before. Additionally proper risk management can reduce the number gaps in the project schedule which can reduce the increase in cost.
Increases to the cost of a project can come from many places. The important goal of a project is staying under or at the set budget. The usual suspects for such increases are failing to meet deadlines, unexpected personnel absence, and design failure. Because these types of costs are fairly common it is quite difficult to properly budget a project and most likely some additional funds are already allocated for a project to not go perfectly.
Project cost can be increased due to many reasons. Some of them may be poor planning, changes in the project, failure of the project design and scope of the project. It is always important to consider the project budget very carefully to avoid such disturbances during the project. This can avoided to some extent by carefully planning the budget and managing the risks.
There is always the cost of replacing material that was damaged or misused. Also the cost of paying employees due to extending the time period of the project. All of this can be avoided with proper communication and following protocol down to the smallest aspect.
Project cost management is an important area of knowledge in the planning process group, since costs are estimated, and the budget is defined. It includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs. It is important to understand the budget and try to stay within it. There may be instances that raise costs, like an unexpected failure. But, having a good plan in place puts you in place to not be affected.
Some reasons for a budget increase on a project may include an inefficient initial design of a medical device that requires necessary revisions. Going backward and redesign an entire product for whatever reason will inevitably increase the budget. Backtracking on a design flaw will require recalling instruments used during the process; this may take time if they're allocated to another project and require all team members involved in the design process to return to the site. Both of those options need money to use (team members being compensated for their time and possibly their machines if they are from another facility) and will call for an increase in the budget if the project continues to move forward successfully. To avoid this issue, the planning process needs to allow the design to be tested for all potential issues and tested for customer need satisfaction before any manufacturing can begin.
