Project Development and Optimization: Principles of Cost-Driven Project Design and Feasibility Study

This study discusses the principles of cost-driven project design and the effect of making a proper decision in the working of the entire world. It also discusses different principles that can be applied to achieve an alternative scenario according to the work provision. The study includes a project feasibility report, theoretical framework for using sensitivity analysis for decision making, and benefits and challenges of financial feasibility technique.

Project Development and Optimization
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Introduction
Making decision is one of the most crucial part of human being and most people find it
very hard to make decision. Sober decision makes the business to have certain momentum by
offering a part that everyone is able to understand. This study is aimed at providing a detailed
discussion of the issue and the principle of decision making and the effect of making a proper
decision has in the working of the entire world. It also discuss different principle that can be

applied to achieve an alternative scenario according to the work provision (Gómez-Bombarelli
&Duvenaud, 2018 pg342). After performing a consistence and reasonable feasibility study, the
study will perform project life and other para meters that are entitles in life standards.
PRINCIPLES OF COST-DRIVEN PROJECT DESIGN
An effective cost management is considered as the central measure of managing accountability.
The issue of cost management includes effective implementation as well as the provision of
resources and every process that is highlighted to ensure the highest level of quality, reliability
and effective productivity (Ureña & Herrera-Viedma, 2015 pg234). This ensures that the
company encores access cost as possible. Effective cost management is about company cutting
their cost of management. It is also a cost management process that enable the company optimize
their performance. The process in this case is much strategic rather than operational.
The first step in cost management and performance optimization is to provide a clear and aligned
expectations. This is very relevant in cost management where so many managers only provide a
guideline in the reduction of product and facilities. In as much as some of the action may be
necessary, the cost reduction generally lies on the daily process and discipline that has a root
cause. The company should also address the challenges of exceeds staffing and unpredictable
over expanded of marginally effective. Finally effective cost management is about dealing with
the systems which are responsible for creating need for structural elements.
In a business where there low cost is a major driver for success has four different pivoted, which
is cost schedule and third is effective maintenance (Ureña & Herrera-Viedma, 2015 pg234).
Each sectors can be either a tool of effective or can serve as a root course of low quality and low
value. To make sense of the effective management the company must understand the four
concept named above.

In the case of cost driven analysis and procedure, there are so many essential possibilities that
should be considered. One of this essential issue is the project and the budget. This two serves as
a light for the organization to optimize the benefits. The practical application is entirely
dependent on the collection of the related data which is compared to the cost of the previous
project. From of many researchers point of view, this can also help in preparing an accurate
budget which can help in providing guidance to the different parts of the organization. This can
also help the organization gather adequate information about what is needed to take a key
responsibility to allocate data(Ureña & Herrera-Viedma, 2015 pg234). The resource of the
organization will be used in an optimum level that can result to an optimum profit for the
organization. The strategy in this case study is meant to help in making a proper decision for the
business growth.
Cost Accounting Categories
The project uses two cost accounting strategies. The first strategy is the GAAP and the second
strategy is the IFRS. This principles can be applied in to prepare and to compare financial
statements such as the budget and the cost analysis. GAAP has three major rules: the first rule is
the basic accounting rule, the second is the specific standards used by the AASB and the final
one is the principle used by the GAAP that ensures that there is a minimum cost consistency and
designing cost-driven projects. Another accounting principle that is also very useful for this
analysis is the international reporting standards. This body can provide a great advantage to
organizations in terms of comparing itself with other organizations in the global rank.
Overhead cost of transaction should be paid by the organizations even when the project is not
fully completes (Gómez-Bombarelli &Duvenaud, 2018 pg342). At the same time, when an
organization paid a cost of any production, all the employee and the designers should take a full

responsibility of making sure that the entire system works in accordance with the organizational
factors and rules.
High cost generation areas.
This is one of the main vital areas that the process making can take based on the situation when
developing a cost effective project based on the needs. This area can help the company identify
places where high cost is generated. For instance when a company seem to have value for the
product that are Brocken. It may assume that each part of a Brocken goods have ascertain value
which the users may not see. Material that has lower cost in repaired may be more profitable
compared to those that have higher cost in repair. The report may have the chase and due to this,
there is an effective way of doing things.
Eliminating Unnecessary Costs
This process involves identifying additional cost of the important part of the organization. There
are two types of cost that can be incurred first is the internal cost and the second is the external
cost. This step can be very important to reduce the cost for repairing an old computer or even
purchasing new computers from the market.
Additional Cost Savings
Cost saving is defined as a procedure of doing a comparison of data other than just doing a blind
buying of machines.
This is defined as a procedure of performing a comparison of an organizational data with other
competitors and hence maintaining the certain level of industrial standards. This also compares
the resent cost that matches with the related data and time frame given.
It is a procedure for comparing own organisation data with other competitors and thus
maintaining an accurate level of cost to maintain industry standards. It also compares the present

cost with the past cost and matches it with the data related to the timeframe (Gómez-Bombarelli
&Duvenaud, 2018 pg342). From this view, the company is able to keep on track only through
estimating the cost and spending on particular items.
Project feasibility report
In sensitivity analysis, feasibility techniques can be very useful for gathering information
particularly for decision making. It can help the company to take proper decision that related to
the development of the business. The feasibility study is an analysis of the value of the interest
rates and the rate of projects to be done. It checks the benefits of both the procedure and the help
this procedures can give to an organization. In this case, the parameter value and the model can
always change. The sensitivity analysis in broad term presents an investigation of the models.
Using this model, sensitivity analysis become easy to perform and to understand especially by
the company management. This has become the most and the best support for most decision
made by the management. The system is widely recognized especially with the big businesses
which are aspiring to grow and achieve their objectives(Gómez-Bombarelli &Duvenaud, 2018
pg342). To conduct a good and acceptable sensitive analysis, there must be a good methodology
put in place. The stability analysis should be integral part of all the solution. This part has been
recognized since the year 1993 with research who did a detailed analysis of the sensitivity
research. In this analysis, the state of the solution can easily be understood without the
information needed to make the changes. The task of this company and its analysis is to conduct
a detailed sensitive analysis by the use of independent investigation. This means that every value
used does not depend on an external value. There are nine changes that have chosen to help
conduct this study and for each change, the solution has been tested to come up with a new

solution for the feasibility and in if that feasibility brings an optimum use of information and
benefit to a company.
Theoretical Framework for Using Sensitivity Analysis for Decision Making
A decision variable is considered as a variable in which the decision maker has control and
wishes to select during decision making. An optimum strategy is defined as a strategy which is
considered the best for the decision maker. It brings an optimization of the variable in the
decision maker and functions. For instance, if the modeler understand the objective of all the
decision made, the user of the information will be generated based on the model. The person who
developed the model will actually be able to use the information based on the performance of the
decision maker’s perspective. The subject or beliefs are actually influenced by the model and
other factors. The belief may be close to the objectives and truth(Gómez-Bombarelli
&Duvenaud, 2018 pg342). This has several advantages to the company because the company can
tell what to expect from the analysis presented by the modeler.
Process of the conducting a sensitivity analysis involves choosing a strategy that can be proceed
as follows. It follows the initial run base that incorporates the values of different parameters.
From this, we can form a belief about the optimal strategy. The belief should based on the
designer and the feasibility observation gained from the modular. The initial strategy is the main
strategy that is used in maximizing the expected value of the objectives. This is also based on the
modular initial belief of probability distribution and is also used to make statements about the
muddlers level of confidence.
Based on the sensitive of the sensitivity analysis, more techniques are incorporated in this case
study. This is because in most cases the modular will revise his or her study and structure and the
way things are done to incorporate the information given. The optimal strategy is based on the

perception of the strategy used which may or may not be altered by the distributed values. Due to
the information extracted from the sensitive analysis, the designers can use the information to
improve the confident level of the optimal strategy (Zhang & Dressler, 2014). Bayesian decision
considers this process as a very stable and very important process. It is also considered as a very
powerful approach of analysis. If the company fails to conceptualize the entire process, then it is
very difficult for them to implement this process because they will not be able to attain way is
required to attain a maximum consistency in work place.
Companies with the most effective management system are always applying the test of relevance
and the value of everyday activity. The companies question every move. This means that every
move they make means a lot to their business strategy. They will be interested in the benefit of
sales margin, cost activity addition, the investment opportunity and business flexibility.
Commit to Broad-Based, Knowledge-Driven Involvement
Focusing on Knowledge and insolvent is very important because of two major reasons. First
involving people may be a challenge because people will not easily give up their commitment,
people who are involve will offer true leadership and respect the company’s procedures. The two
major important factor to success is the leadership and commitment.
Benefits and challenges of financial feasibility technique:
Benefits
Financial feasibility has several challenges that organization may identifying the demands and
the customers’ needs in the market.

One of the main benefit is that it can help the company improve their behaviour through a
successfully benchmarking with other companies.
It can determine different types and ways of resource usage by individuals companies. This
resource can be used based on the company needs at the time of the begging of the company
working and concentration. The feasibility also helps in accruing a logistical behaviours and
vilification plans which are useful in averting the challenges that may be faced by the company.
Due to this, it create an opportunity for the company. Finally, a feasibility study is very
important because it identify the qualifications of human resource that and human involving in
the projects
The feasibility study used in company has been able to achieve a 50% rule set when the
organization needs to go for the replacement.
Challenges
Besides the tremendous advantages of the feasibility study, it pose several challenges such as:
The analysis can take extra time which may translate to monitory terms. Finally it calculates the
risk that can be worked on.
The project life mean the time in which a company can benefit from the project in terms of the
financial investment (Vohs, Baumeister et al., 208 pg432). This can help in the APIC to calculate
the money source and calculate it in terms of what they need to do to be able to get the money
they need to achieve their goals. From a research point of view, the company’s interest rate may
also offer guidance and give procedure in a more separate and isolated way. Through the interest
rate, some companies may take advantages of this and save same money and this may make a
company to acquire maximum amount of revenue from different resource according to the needs
of the company. The given scenario shows that there is a 50% possibility of the company to

make a preliminary decision based on the demand of what is needed to be achieved. For this case
the accompany needs to set its priority and compares the cost of the repairing the equipment’s or
replacing the equipment. This must be done in a way that the cost would be 50% cheaper
compared to the original cost (Endsley, 2017 pg145). In this case, the issue of salvage must be
considered and a comparison between the state markets of the value of the information needed be
analysed careful so that every spending can be taken care of in a more reasonable way.
The above equation shows the cost of repair and salvage. This shows the importance of
calculating the profit that will be achieved when a replacement is done or when a repair is done.
On both occasions, there should be a benefit when either of the two happens because the
company is looking forward to reduce the cost of operation. In case the product is adding value
to the product after doing a repair, the product will choose clearly because it is what it needed.
Most repair experience have sometime contributed to power prices(Dong & Herrera, 2015). This
simply mean that the value of the product life is estimated that it is will be more valuable to do a
replacement than buying new product.
Accounting principles in financial projection and budget
CASH
FLOW
July Aug
ust
Sept
emb
Octo Nov
emb
Dec
emb
Janu Febr Mar Apri May June

er ber er er ary uary ch l
OPENIN
G
BALANC
E
$291 $3,9
71
$5,2
27
$5,6
55
$5,6
56
$5,5
87
$5,4
06
$5,2
75
$6,3
16
$6,5
89
$7,0
81
Cash incoming
Sales $1,2
00
$4,5
44
$1,5
90
$1,3
00
$1,7
10
$1,4
90
$1,6
00
$1,4
10
$1,3
80
$1,4
90
$1,5
00
$1,3
50
Asset
sales
$2,4
10
$2,1
00
$2,3
30
$2,3
10
$2,2
50
$2,3
90
$2,3
50
$2,2
10
$2,6
50
$2,2
10
$2,3
40
$2,4
90
Debtor
receipts
$3,5
00
$3,8
90
$3,9
10
$3,5
00
$3,2
00
$3,1
00
$2,9
00
$3,4
50
$3,3
90
$3,2
80
$3,4
90
$3,5
00
Other
income
$2,7
00
$2,8
50
$2,9
00
$2,6
50
$2,4
50
$2,5
00
$2,3
30
$2,5
40
$2,8
90
$2,7
00
$2,5
60
$2,6
70
Total
incoming
$9,8
10
$13,
384
$10,
730
$9,7
60
$9,6
10
$9,4
80
$9,1
80
$9,6
10
$10,
310
$9,6
80
$9,8
90
$10,
010
Cash
outgoing
Purchases
(Stock
$45 $560 $48 $41 $46 $47 $450 $510 $480 $52 $52 $51

etc) 0 0 0 0 0 0 5 0
Accounta
nt fees
$20
0
$200 $20
0
$20
0
$20
0
$20
0
$200 $200 $200 $20
0
$20
0
$20
0
The cash flow statement above clearly shows that the total inclusive payment is $480 as
per sections 31. In general terms, the cash flow is meant to present the interest that is estimated
that is supposed to be paid separately. There four type of inflow in each and every company.
This inflows are: sales attached to assets, recepts that comes from the debtors, and products sold
by the company. Section 13 sows that the company can spend some amount of cash to deal with
security and achieve its business purpose (Dong & Herrera, 2015). This is where they can plan a
similar role and a specific task and commodity for resale. In this regard, cash flow have become
very important entity for the sale in terms of purchase sale dealing and securities, they also
classified as the inflow statement.
The above discussion shows that decision making is very important part of any
successfully business and it is very essential for fostering the role of growth in the society.
Through an effective decision making, companies can achieve a tremendous growth and smooth
delivery in the business environment. From this cash flow statement analysis, it is evident that
the company can maintain a certain level of profit margin and at the same time make outside
business in three months or in a shortest time possible. It is also evident that when a company
implements an effective financial feasibility, it can overcome several problems and achieve
certain organizational goals without any challenge (Zhang & Dressler,2014). This challenges

will be overcome because the company will make early decision that will help in ensuring the
business is not getting into a debt. Feasibility study also shows that there is a better value in
replacement that can be generated in the present and in the feature. This replacing is therefore the
best option is some companies based on the situation. The feasibility study and the cash flow are
two basic tools that provide the company with an opportunity to have an advanced preparation
for any other advance condition.
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