Literature Survey on Project Cost Management

Literature Survey on Project Cost Management Introduction to coursework Introduction of Literature Survey Literature survey is a surface level of literature review, which typically a major part of the introduction of a research paper. The literature survey can be defined as the process of analyzing, summarizing, organizing, and presenting novel conclusions from the result of technical review based on scholarly articles that has been published (Espanta, 2013). By doing the literature survey it will help the researcher to identify their research topic. Literature survey is the way how the researchers make their research. According to Oxford Dictionaries, research means the systematic investigation into and review of materials and sources in order to establish facts and reach new conclusions. Most of the researchers define that the literature review is a collection of summaries of papers or an elaborated annotated bibliography of multiple research manuscripts. Other than that, a quotation from Levy and Ellis (2006) said that literature survey is the use of ideas in the literature in order to justify the particular approach to the topic, the selection of methods, and demonstration that this research contributes something new. In this case, project cost management is the topic of my literature survey and as a sub-topic in project management. It is important for me to view literature which is appropriate to my topic and at the same time will help me to know and learned about project cost and why it is important in project management. Objective of Literature Survey The purpose of the literature survey is to draw on and critique previous studies in an orderly, precise and logical manner (Coughlan, 2013). Most of the literature survey is shown the research fits in the existing knowledge that helping the researcher to understand the topic of the survey, the strength and the weaknesses of the research. Besides that, the reason why we do the literature survey is to substantiating the problems from the previous research which related to what is needed to be known. Other than that, some of the problems in the research paper are not totally solved by the researcher due to the lack of information and sources from the participant. Because of that, a good literature survey will help to extract and evaluate the issues that have emerged from previous work in order to overcome the problems. The objective of literature survey in the project management subject is to analyze and identify the previous work on project cost management in order to produce a summary of the knowledge on this topic. Once an initial overview has been done, it is necessary to critique and framing the new research methodologies, approach, goals, and research questions for the proposed survey of this topic. Approach of Literature Survey Before starting the literature survey, we need to determine the types of approaches that we want to use in our study. There are two approaches in the literature survey which is quantitative and qualitative studies. Quantitative research studies are usually driven by the context of previous knowledge, with specific research questions in mind based on conducting a broad literature review before data collection commences (Coughlan, 2013). While the qualitative studies is typically adopt a less structured approach to do a literature review at the outset (Coughlan, 2013). To get a broad of information about research question or topic of interest, we must be honest in using the input based on data that has been collected. This approach is more focusing on emerging of the data rather than pre-existing knowledge. The approach that I will use in this literature survey is more quantitative studies. Quantitative studies are easier and faster compared to qualitative studies where need a lot of time to complete the task. By summarizing, comparing and contrasting the findings of the previous task, and offering new idea is much easier to evaluate rather than describe it. Discussion of the selected review topic: Introduction of project cost management Almost all the projects that have been planned by an organization need to be guided properly in order to receive the expected output and can achieve the goals at the end of the project. In project management there are has of triple constraint that must be faced by the project team especially project manager. The three constraints in project management are scope goal, cost goal, and time goal. The control of various costs is a very important task for any project where the project manager needs to oversee. The project managers is the person that is striving to meet the triple constraint by balancing these three goals in order to meet the project goals. In this literature survey is more focusing on the topic of project cost management. Oxford Business English Dictionary defines costs as an amount of money that we need in order to buy, make or do something. Other than that, in the accounting field, cost is the large amount money that a company need to pay, which affects its financial results. As we know, money is a resource that we need and used to achieve a specific objective. Because of that, it is important for project managers to understand clearly about project cost management in order to achieve the budget goals. Project cost management includes the process required to ensure that a project team finish the project within an approved budget (Schwalbe, 2011). The most responsible person in project team is project managers because he or she need to ensure that their projects are well managed, have accurate time and cost estimates, and have a realistic budget which has been approved. According to Project Management Professional (PMP), a successful project manager must be able to plan, predict a budget, and control the costs of a project. Project cost control state that the effectiveness of project management depends on the project manager itself. If the project manager fails to manage this aspect, it can be difficult to handle because the project manager would essentially determine whether can or not the organization make a profit or face a loss. A factor that is common in Project Cost Management Project Resources The common factors that have been discussed on project cost management is project resources. This is because all the project resources involve the cost in project management. Thats why project resources need to be pointed in order to complete each project. Resources is most important things to be considered in project management as a part of the planning process where the project manager must determine what resources are needed. To complete the project all the resources are required is such as labor, materials, supplies, equipment, and contingency and escalation. (Source: Project Management Professional) The project manager needs to consider with internal and external resource in organizations, the capacity, and demand while planning the resources. Besides that, the project manager also must know what resource utilization, realization, and profitability for the project. At the same time, the project manager needs to identify on how each resource is utilized on the project, program, or business area. Because of that, resource planning is the first aspects that the project manager needs to handle in order to complete the project. A factor that is similar in Project Cost Management Project cost management process The financial and human resources that are required in cost management in order to complete a project within an approved budget. Cost management can be defined as the application of management accounting concepts, methods of data collection, analysis and presentation in order to cater the information needed to plan, monitor and control costs (Frank, 2011). According to Frank, Schwalbe, Richard, and Mohammad, there are three processes in project cost management that are used by them and which described in the PMBOK Guide: Estimate costs The first steps in cost management is to estimate the costs of human resources and physical resources for each activity in the project. Cost estimating can be defined as a process of calculating all the resources costs that involved in the project work. The main outputs of the cost estimating process are activity cost estimates, basis of estimates, and project document updates (Schwalbe, 2011). This step often occurs in the planning phase and it is important for project managers to understand the estimated cost of each activity. Determine budget The next step in project cost management is to create a realistic project budget. In the project budgeting process, the main outputs is cost performance baseline, project funding requirement and project document updates. The process of determining the budget should involve the overall cost estimates to individual work items for establishing a baseline for measuring performance. A good project budget will help the project manager to make decisions based on the schedule and resource allocation. Control costs The last process in project cost management is controlling the costs. Controlling costs is a process to control the changes of the project budget. The project manager needs to regularly monitor and measure the performance of the budget and revise forecasts as required for effective cost controls. The main output at the end of the cost control process are work performance measurements, budget forecasts, organizational process asset updates, change requests, project management plan updates, and project document updates. A factor that is difference in Project Cost Management Resource Planning The use of resource planning is to identify all of the required resources in the project. It is very important in project management because it will help the project manager to examining the project work and determining what are the resources, people, and equipment are needed to complete the project. Besides that, resource planning also are used to identify the expected quantity of the needed resources so the predicted cost can be calculated. Based on the survey that has been done some of the survey stated different item in resource planning. According to Richard, he stated that the resource planning inputs is consist of six that are enterprise environmental factors, organizational process assets, activity attributes, resource availability, and project management plan. The tools and technique that are used are expert judgment, alternative analysis, published estimate data, project management software, and bottom-up estimate. Finally, the output to resource planning resource requirements, activity attributes update, resource breakdown structure (WBS), resource calendar update, and requested changes. (Source: Richard) Based on Project Management Professional (PMP), the input to resource planning consist of six, which is work breakdown structure (WBS), historical information, scope statement, resource pool description, organizational policies, and activity duration estimates. The tool and techniques that are used is based on expert judgment, alternative identification, and project management software. And resource requirement is the output of this resource planning. (Source: Project Management Professional) A factor that is unique in Project Cost Management Costs Control Techniques Based on a survey that has been done, there are several of the valuable and primary techniques used in order to get an efficiency and effectiveness of project cost control: Planning the Project Budget The project manager needs to convince when make a budget at the beginning of the planning session with regard to the project resources. By planning the budget, it will help the project manager to identify all payments that need to be made and costs that will occur during the project life cycle. Keeping a Track of Costs The second technique is keeping track of all actual costs to prepare a budget based on time. This technique will help the project manager to detect all the budget of a project in each of its phases. Besides that, it will be easier for the project manager to work with the team members. Effective Time Management Effective time management technique is an important technique to be applied by the project manager because can help to remind the project team of the deadlines of the project in order to make sure that the project is completed on time. Project Change Control By having the project change control system, it can help to find any possible changes that could happen during the project. Use of Earned Value Earned value is the accounting technique that helpful for large projects in any quick change. Conclusion Project cost management is a traditionally weak area of IT projects, and project managers must work to their ability to convey the projects within approved budgets (Schwalbe, 2011). The aim of a cost management system is to assign direct costs and allocated indirect costs to products and services (Frank, 2011). Based on the survey that has been done by the researcher, most of the topics that discussed in project cost management is quite similar and interrelated. For example, the importance of project cost, and the basic project cost management principle, concept, and terms. Besides that, all the research has stated that the project manager is an important and responsible person in project teams. To be a project manager, we must acknowledge the importance of cost management and take responsibility for understanding basic concepts, cost estimating, budgeting, and cost control. If we have the ability in all this aspect so that we can be a project manager. As a conclusion, this literature survey has provided a comprehensive picture of the knowledge relates to my topic which is project cost management. It also helps me with provides justification for the proposed research by right information. In addition, a good review will interpret and critically obtain the pertinent findings and issues that have emerged from previous work. Therefore, the literature survey needs to be done in the context of all information related to my topic. At the same time, it can help me to encourage and create new ideas by highlighting inconsistencies in current knowledge. References Coughlan, M. (2013). What is a literature review?. Retrieved March 29, 2014, from http://www.sagepub.com/upm-data/55172_Coughlan.pdf Espanta. (2013). Literature review versus literature survey. What is the difference?. Retrieved March 29, 2014, from http://academia.stackexchange.com /15080/literature-review-versus-literature-survey-what-is-the-difference. Frank, H. M. (2011). Public sector cost management practices in the Netherlands. International Journal of Public Sector Management, 24(6), 492-506. Levy, Y. and Ellis, T. J. (2006). A systems approach to conduct an effective literature review in support of information system research. Informing Science Journal, (9), 181-212. Mohammad A. Rajabi. Chapter 7: Project Cost Management (PMBOK Guide). Retrieved April 4, 2014, from http://www.marajabi.com/PMBOK/Chapter07. pdf Parkinson,D., Noble,J. (2005). Oxford business English dictionary: For learners of English. Oxford: Oxford Univ. Press. Project cost control. Retrieved April 1, 2014, from http://www.tutorialspoint.com/ management_concepts/project_cost_control.htm Project management professional (PMP): 7 Introducing Project Cost Management. Retrieved April 3, 2014, from http://www.euroi.ktu.lt/lt/images/stories/ Paskaitos/ch07.pdf Research: Definition of research in Oxford dictionary (British World English). (n.d.). RetrievedMarch27, 2014, from http://www.oxforddictionaries.com/ definition/english/research Richard, B. Project cost management. RetrievedApril4, 2014, from http://www2. parkland.edu/businesstraining/documents/CostMgmt_000.pdf Schwalbe,K (2011). Managing Information technology projects. (6thed.). Cambridge, Ma: Course Technology.