PMGT107 Project Cost Management

1.

In order to make proper budget for the project and make it a successful one it is important to choose the proper contract for the budget. The selection of proper contract method is a tricky one to consider as it influence the overall progress in the project while the outsourcing agreements is taken into consider. There are two popular method for building contract for the project and they are:

• "cost-plus-fixed fee"  
• "time & material" based contract

Cost plus free method is more traditional method that sets a fixed price in which the vendor have to finish the work while the time and in material based contract the customer is charged as per the hour of labor spent and the cost of the material considered. The budget for this particular project will be prepared based on the time and material based contract as it provides excellent opportunity for adjusting the scope, requirements, replacing the features of the project, shifting of the project direction and involving the users for the product.

The budget must be built from a time and material based contract. Here the time and material based contract is chosen because in this type of contract the total project is divided into some phrases. Also, another reason to choose this contract for the cost flexibility of a project. Here the cost flexibility means the customer will pay the contractor based on the time taken by the contractor to complete the project and the materials used in the construction process. In this type of contract the work effort does not matter. The time and the material is normally used in this type of project to determine the total cost of a project.

2.

According to me managerial decisions are never based on the figures of relevant cost entirely. This sis due to the act that the data that are required for making decisions include employee and stakeholder management. Maintaining of employee betterment leads to the fact that the business management is always benefitted. In case the employees of the organization status motivated, the expansion of the organization leads to better processing of data management. This better human resource management is one of the major factors that decides the turn-over of the organization. In case the employees are not positively motivated, the working environment gets better and the performance of the employees gets better (Kaya, 2017). Hence working environment of the organization serves as a major reason for the processing of the decision making. Another aspect that is taken into consideration is that the bonding between the stakeholders of the organization. In case there is a good bonding in between the stakeholder the efficiency of the working process increases and in case there is a lack of bondage in between the stakeholders, arising of conflicts acts as major problem (Kaya, 2017). These are the reasons that the decision making will require processes other than cost estimation as the entire processing of the organization is not only dependent on the cost management but so on the stakeholder relationship of the organization.

References

Sandberg, M. and Holmlund, M., 2015. Impression management tactics in sustainability reporting. Social Responsibility Journal, 11(4), pp.677-689.

Kaya, M.V., 2017. RSEP.