Report on Project Cost Management Techniques for a Call Center

This report delves into the intricacies of project cost management, specifically within the context of establishing a new call center. It begins by outlining the importance of budgeting, detailing the inputs required, and exploring various tools such as analog estimation, parametric modeling, and computerized tools. The report then moves on to cost control, emphasizing the significance of monitoring expenditures, analyzing performance, and managing changes. It highlights the inputs necessary for effective cost control, including cost baselines and performance reports, and discusses methods like cost change control systems and performance measurement. The report also provides a finalized cost analysis, including budget plans and operational costs, and proposes improvements using techniques such as Kaizen costing and Six Sigma to reduce costs and optimize processes. Overall, the report provides a comprehensive overview of project cost management strategies for a new call center, aiming to minimize risks and ensure project success.

Running head: PROJECT COST MANAGEMENT TECHNIQUES
PROJECT COST MANAGEMENT TECHNIQUES
Name of the Student
Name of the university
Authors Note:

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Table of Contents
Introduction......................................................................................................................2
Budget..............................................................................................................................3
Inputs required for cost Budgeting..............................................................................3
Tools for cost Budgeting.............................................................................................3
Cost management.............................................................................................................4
Inputs to cost controlling.............................................................................................5
Tools and methods for cost controlling.......................................................................5
Benefits of Cost control...............................................................................................6
Finalization of Cost..........................................................................................................6
Improvements..................................................................................................................7
References............................................................................................................................9

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Introduction
The report relates us to the topic of cost management involved in managing the cost
required for the setup of a new call center. It helps the various business in predicting various
expenses in an organization which will ultimate reduce their risk of going over the budget.
Reducing the cost involved in a project can be achieved by increasing hiring, coaching and lastly
better training of staff members, keeping an eye on the action or activities of various agents,
improving the resolution of first call, Improving the schedule of cost and reducing or minimizing
the cost of attrition.
Various responsibilities which are involved for applying proper techniques for the
development of new call center for large organization. Various factors like budget, monitoring
expenditure, finalizing of cost, improvements which are involved in this project cost
management has been discussed in details. Budget of a project mainly depends on following
parameters like labor, materials, equipment, services and facilities. Cost control of project mainly
comprises of following things like meeting of targets, progression as planned, cost as planned.
Budgeting of project mainly comprises of following parameters like baseline of the cost involved
in project. Project cost management consist of various process which mainly checks that the
given project is completed in given time. It mainly helps in ensuring that the given project is
completed within project.

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Budget
Budget mainly involves development of an approximation or estimation of cost of
resources which are needed for completion of various project activities. Cost Budgeting
generally comprises of overall estimation of cost involved in project which will help in
establishing a baseline for measuring the performance of various project.
Inputs required for cost Budgeting: There are certain tools involved in cost budgeting that are
estimation of cost, Work breakdown structure, schedule of project. It helps in estimation of cost
of various resources like hardware, software, development of team salaries, training, operation
labor which are involved in a project has been discussed in details. It can be present in summary
or in details (McNeil, Frey and Embrechts., 2015). Scheduling of project is inclusive of planned
start and proper finished dates for a project.
Tools for cost Budgeting: Tools and techniques are considered to be mandatory for project
development and estimation of cost and development of budget of various work items involved
in a project (Meng., 2012). There are certain tools like Analog estimation, parametric modelling,
Bottom-up estimation, tools for computerized, bottom up estimation, computerized tools.
Analog estimation: Analog estimation is also known as top down estimation which
means the cost of a previous project is compared with the present cost of project that is the
implementation of new call center in a large firm. This method is generally less expensive than
other method or techniques.
Parametric Modelling: Parametric modelling consist of various parameters of project in
a mathematical model which helps in analyzing the involved cost of this project that is the
implementation of new call center. Models can be simple or complex as per the needs it is used

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accordingly. This model depends on various parameters like accurate information, various
parameters used are quantifiable and lastly it should be flexible that is it can work for large
project as well as for small project.
Bottom- up estimation: Techniques which are involved in estimation of specific and
individual work items and then adding the individual items for the various cost involved in a
project.
Computerized Tools: Various software tools like project management software and
spreadsheets are widely used for analyzing and estimation of cost (Schwalbe, 2015). Theses
software products can help in simplifying the use of tools involved in the project.
Outputs of cost Budgeting: Cost budgeting helps in analyzing the cost baseline of a
project. In this project that is the implementation of a new call center in an organization cost
baseline is a time phased budget which will help in measuring and controlling the performance
of cost involved in a project (Mir and Pinnington., 2014). It is developed by the help of
estimation of cost and displaying it in the form of S curve.
Monitoring Cost management
Cost management generally comprises of following factors like changes in the cost of
baseline to check for changes which can be beneficial for a firm and it also helps in analyzing the
bassline of cost involved in a project and also managing the changes which can occur in a project
like implementation of new call center in an organization.
It generally comprises of four factors that are:

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 Analyzation of performance of cost to checking the plan.
 Checking the various changes as recorded in the baseline of the cost involved.
 It prevents incorrect and unauthorized changes being implanted in the cost
baseline.
 Altering the various involved stakeholders about the authorized changes.
Inputs to cost controlling
There are generally four parameters involved in it and this are cost baseline, performance
report, change request and lastly cost management plan.
Report of performance: It helps in analyzing information on performance of cost like
the budget which has successfully completed and which has not been successfully completed
(Reiss., 2013). This report can beneficial to project team to tackle problem which can arise in
future.
Change in request: Change in request may in many forms which can be oral or written,
direct or indirect, external or internal which can be legally mandated or optional. Changes may
be considered to be important for increasing the budget or decreasing it.
Cost management plan: This plan describes how the variances in cost can be managed.
A cost management can be formal or informal which can have details on the various
requirements of the project.
Tools and methods for cost controlling
Change in cost control system: This system generally defines the various methods by
which the cost baseline can be easily changed. It is inclusive of paperwork, tracking systems and

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approval levels. Cost change control system should be added with the overall change control
system.
Measurement of performance: This technique is very useful in controlling the cost
involved in a project.
Additional Planning: Generally, few project run according to the plan and changes may
be required. Changes may be need new or update value of estimation of cost involved in a
project.
Computerized Tool: Various software equipment’s like project management software or
spreadsheet can be considered to be beneficial for keeping a track of expected cost vs real cost
and keeping a track of various effects of changes involved in it.
Benefits of Cost control
Helps in Revised estimation of cost: It is used for making changes in the cost
information which is helpful in managing the project. Right stakeholder must be informed as pefr
the need.
Budget Updates: Budget updates are nothing but updated form of cost estimation. In
other words, they can be stated as various changes which are involved in approval of cost
baseline.
Estimation at Completion: Estimation at cost or EAC is a forecast of total cost involved
in a project. Some of the techniques involved in a project are tracking of remaining portion of a
project, estimated of budget of the remaining work.

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Finalization of Cost
Budget plan - INPUT VALUES
Hardware $ 20,000.00
Software $ 900.00
Development team salaries $ 8,000.00
Training $ 1,000.00
Total Development Cost $ 29,900.00
Hardware $ 12,000.00
Software $ 210.00
Operational Labor $ 16,000.00
Total Operational Cost $ 28,210.00
Approximate salary savings $ 110,000.00
Reduced operating cost $ 45,000.00
Total Benefit $ 155,000.00
Improvements
For the improvements of cost management technique in the new call center set up
following twelve techniques must be applied (Phillips, 2013). These are activity based costing,

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target costing, total quality management, Benchmarking, Reengineering of various business
process, JIT inventory control system, maintaining a balance score card, six sigmas, life cycle
costing, Kaizan costing, Theory of constraints and lastly activity based management.
Kaizan Costing: It refers to the continuous and gradual upgradation through small
activities instead of large or radical movement which can be achieved through innovation or
innovation in technology (Potts and Ankrah, 2014). In other words, it can be stated as the method
of cost reduction which takes place during the manufacturing phase of the product. This method
can be used in the implementation of new call center as it can benefit it through a number of
ways.
Six Sigma: This method or technique was first implement in Motorola which is a well-
known organization. This method mainly focuses in reducing the cost, improvisation of process
and increase in profits (Potts and Ankrah., 2014). This method consists of six steps like
identification of process, defining of it, taking proper measure, analysis of it, improvisation and
lastly control. Above mentioned steps can be proved to be beneficial for this organization that is
call center. If this methodology is applied in this call center setup it can help in reducing different
cost involved in it. This will ultimately help in reducing various cost which are involved in the
set of this project.

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References
DRURY, C.M., 2013. Management and cost accounting. Springer.
Flyvbjerg, B., 2013. From Nobel prize to project management: getting risks right. arXiv preprint
arXiv:1302.3642.
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.prize to project management: getting risks right. arXiv preprint
arXiv:1302.3642.
Larson, E.W. and Gray, C., 2013. Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Martinelli, R.J. and Milosevic, D.Z., 2016. Project management toolbox: tools and techniques for
the practicing project manager. John Wiley & Sons.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative risk management: Concepts,
techniques and tools. Princeton university press.
Meng, X., 2012. The effect of relationship management on project performance in
construction. International journal of project management, 30(2), pp.188-198.
Mir, F.A. and Pinnington, A.H., 2014. Exploring the value of project management: linking
project management performance and project success. International journal of project
management, 32(2), pp.202-217.
Phillips, J., 2013. PMP, Project Management Professional (Certification Study Guides).
McGraw-Hill Osborne Media.

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Potts, K. and Ankrah, N., 2014. Construction cost management: learning from case studies.
Routledge.
Reiss, G., 2013. Project management demystified: Today's tools and techniques. Routledge.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.