Implementation of new cost control

Running head: PROJECT MANAGEMENT
Implementation of new cost control approach of the NOVA Company
Name of the Student:
Name of the University:

PROJECT MANAGEMENT1
Table of Contents
Part A: General Overview..........................................................................................................2
1.1 Evaluate the relationships between project cost control and project financial
performance............................................................................................................................2
1.2 Evaluate key costs at initial project planning stage of fashion project........................2
1.3 Explanation of key strength of different cost estimation techniques..........................3
1.4 Explanation of key cost methods and strategies to implement a new project.............5
1.5 Steps taken to improve financial performance of future projects at NOVA Company
6
Part B: Gantt chart......................................................................................................................7
Part C: Budget creation..............................................................................................................8
References................................................................................................................................12

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Part A: General Overview
1.1 Evaluate the relationships between project cost control and project financial
performance
Both financial budget as well as cost control comprised an estimation of project cost.
There is setting of agreed project budget as well as managing of forecasted cost against the
project budget. The financial performance of project is identified as planned project
expenditure. It is the cost baseline against the actual project expenditure as well as predicted
project cost for work efforts (Huang 2016). The financial performance of project is measured
for the project expenditures. Success in the project budget is based on reliable project budget.
Jayaraman (2016) stated that the financial performance is a measure in how well the business
uses its assets from primary mode of their business as well as produce business revenue. This
term is used in the project plan to measure financial health of the business over a certain
period of time.
The cost control is a way to manage contingency as well as management reserve of
the project plan. At the time of controlling the project cost, the project manager should focus
on original project budget, approved cost for the project, actual cost and committed cost.
Pheng (2018) mentioned that the project cost control is a practice to reduce the expenses of
the business to make an increase in business profits. The project manager compares actual
project results with budgeted expectations. When there is increase in actual project cost as
compared to planned cost, then the management is responsible to take project actions. Xie
(2016) discussed that the main benefit of cost control is lowering the entire project expenses.
It is also a key significant factor to maintain as well as grow business profitability.
1.2 Evaluate key costs at initial project planning stage of fashion project
The key costs at planning of a fashion project are:

PROJECT MANAGEMENT3
Direct cost: This cost is represented the cost of resources which have direct relation
with project plan. This cost includes labor and materials cost. The labor cost represents cost
of the project team those are involved in fashion project development work. The cost is
calculated based on hourly rate of the designer working in the project with 8 working hours
per day. Hiring of external project resources for the fashion project is also a labor cost
(Maylor 2010). Based on requirements of the project, materials needed to deliver designing
work is estimated as well as added to direct cost. The materials should be print the design,
cotton, wool, silk, leather, experimental fabrics and others. Direct cost also includes
commissions as well as manufacturing supplies.
Indirect cost: This type of cost is an expenditure which have no direct relation with
project plan such as renting an office, office equipment, meeting room and others (Hu, Cui
and Demeulemeester 2015). Consumption of assets of business is considered as indirect
project cost which are added to the budget of the project plan. Indirect cost also includes cost
of quality control, depreciation as well as insurance.
1.3 Explanation of key strength of different cost estimation techniques
Following are the project cost estimation techniques which are used in the project
development work such as:
Analogous estimation: Idri, azzahra Amazal and Abran (2015) stated that this cost
estimation technique is using historical data from same project to estimate project cost. Cost
estimate is adjusted for known project differences between the projects. The strength is that
this type of cost estimation used at initial phase of the plan but less accurate as compared to
other techniques. It estimates various project parameters as well as measure of scale.
Parametric estimation: Atia, Khalil and Mokhtar (2017) mentioned that parametric
estimation is using statistical model for developing the cost estimate. The strength is that it