Cost Performance on Project S Often Poor, What Are the Possible Causes of This and How Can It Be Improved?
‘’Cost performance on project s often poor, what are the possible causes of this and how can it be improved?’’
Introduction
The cost planning is one of important phases for project management. It will goes through whole project’s life cycle. It is foundation of project and it will tell the project are measured, reported and controlled in every process. Estimating is the process of forecasting or approximating the time and cost of completing project deliverables.
A successful project management will include time control and cost planning. Accompany with these two important features, and then bring out the best quality project.
Causes of poor cost performance
According to many decades’ records, Morris et al. (1989) has researched more than 4,000 projects between 1959 and 1986, after this, he concluded that projects are normally poor at achieve their targets.
*From example of helicopter Comanche which is largest acquisition program in U.S. army ($ 48b). It is purpose to replace whole school of light utility reconnaissance and attack helicopters with one helicopter that makes military gears be modular designed which already used in many kind of armoured machines, it is easier to fix and replace. However, this project has begun in 1983, and it is been 5 times restructured, furthermore, it’s cost growth in product development 101% and schedule growth in product development 120%. Finally, it has been cancelled in 2004. This activity is to avoid sunk cost that done by this overrun project, economist normally suggest to do this way, because it is only suffering in early stage, and it will saves opportunity cost.
In general, this shows lack of planning, without good planning, there are several areas will affect on cost estimating, and then directly affect on cost performance that leads to delay of time and cost overrun.
Time management
Delay is the most common problem of poor cost performance in projects, from road building project to the most complex project,
Introduction
The cost planning is one of important phases for project management. It will goes through whole project’s life cycle. It is foundation of project and it will tell the project are measured, reported and controlled in every process. Estimating is the process of forecasting or approximating the time and cost of completing project deliverables.
A successful project management will include time control and cost planning. Accompany with these two important features, and then bring out the best quality project.
Causes of poor cost performance
According to many decades’ records, Morris et al. (1989) has researched more than 4,000 projects between 1959 and 1986, after this, he concluded that projects are normally poor at achieve their targets.
*From example of helicopter Comanche which is largest acquisition program in U.S. army ($ 48b). It is purpose to replace whole school of light utility reconnaissance and attack helicopters with one helicopter that makes military gears be modular designed which already used in many kind of armoured machines, it is easier to fix and replace. However, this project has begun in 1983, and it is been 5 times restructured, furthermore, it’s cost growth in product development 101% and schedule growth in product development 120%. Finally, it has been cancelled in 2004. This activity is to avoid sunk cost that done by this overrun project, economist normally suggest to do this way, because it is only suffering in early stage, and it will saves opportunity cost.
In general, this shows lack of planning, without good planning, there are several areas will affect on cost estimating, and then directly affect on cost performance that leads to delay of time and cost overrun.
Time management
Delay is the most common problem of poor cost performance in projects, from road building project to the most complex project,
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