What Is Project Cost Management?

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Thorough project management knowledge, skills and techniques are necessary for the successful execution of a project from iniatiation to closing. 

One of the tools for a successful  project execution is an effective project cost management.knowledge.

Project Cost Management includes necessary techniques or processes for the completion of projects within approved budget.

These processes are estimation of costs, determination of budget and control of costs.

1. Estimation of costs -

The establishment of monetary resources required to successfully complete a project is crucial.

Some of the techniques used to estimate costs include 

a. parametric estimating - the parametric cost estimates are calculated by using the relationship between historical data and other variables such as cost, budget and duration.

b. reserve analysis - cost estimates sometimes include reserve analysis- this analysis is relevant to cost estimates that contain cost uncertainty. 

The uncertainty is accounted for by including contingency reserves or allowances in cost estimates.

Contingency reserves are often required as part of funding requirements.

c. analogous estimating - this techilnique uses values obtained from scope, measures of scale, budget and duration. The technique relies on historical costs of similar projects done in the past, to make estimates for a current project.

There are other tools such as expert judgement and the bottom up estimating 

2. Determination of Budget.

Budget determination  is a process that aggregates cost estimates of activities to establish an approved baseline. 

The established baseline would include authorized budgets (standards for assessing project cost performance) and exclude reserves made by management.

Some of the tools used to determine project budgets are expert judgement and budget reserve analysis.

a. Expert judgement is made on the basis of expertise in industry, knowledge of the project area and relevant experience.

b. Budget reserve analysis is used to establish both managment and contingency  reserves for a project. 

Contingency reserves as pointed earlier, are necessary because sometimes during project execution, some unplanned changes may become necessary. 

3. Cost control.

This is the process of monitoring a project, updating the budget when it's necessary and managing changes to baseline.

Some of the techniques used are forecasting, performance reviews, Earned Value Management and variance analysis and To-Complete Performance Index (TCPI).

5 Great Ways To Prepare For A Job Loss.

Recently, job cut has become a constant reality. The reason is, many economies are frequently in and out of depression.

Businesses would always do all they could to push total revenue above total costs. If sustained profitability is the oxygen of every successful business, cutting costs would always be applied to avoid suffocation.

Job cut is most busineeses'  primary cost cutting tool. What this means is, right now, someone has just lost a job or is about to lose a job for no fault of theirs. But...that wouldn't be the end of life.

There's life after a job loss. A weak economy could recover quickly, grow rapidly and give businesses opportunities to hire again. But one would have to be alive, sound and prepared when the next employment opportunity shows up.  

This post gives useful tips on how to prepare for a job loss and survive a layoff.

1. Invest in continuous learning.

Don't stop learning after you've secured your dream job. Having a dream job is not the same as having job security.

As we already know, some extraordinary event could occur and cause business giants to layoff their employees. So in reality, there's no true job security in paid employment.

But you can build an enduring job for yourself. You can start from the scratch and build it all the way up while you still keep your day job. There's a condition, you must learn new things every step of the way to make a success of it.

Investing in continuous learning also gives you an edge, In case, you lose your job and start job hunting. Possession of extra useful skills is going to place ahead of the competition for a good job.

2. Update your resume regularly.

As you acquire new skills, add them to your resume and update it. Never allow the lucrativeness and security that present job seems to offer, lull you into forgetting to regularly update your resume.

Don't also be too comfortable in your present job and forget to constantly be on the look out for better opportunities. 

3. Set up an emergency fund.

You should be able to continue to fill basic needs for the short period you may be out of work. 

No job, no more income, so where would the money to pay bills come from? From an emergency fund, assuming one was set up when in paid employment 

If you don't have one? Now may just be the right time to set up one. You can't tell what's going to happen next 

Experts advise that you should have in that fund, an amount that would be enough to cover your living expenses for a period  between 3 and 6 months. Aim to have an amount that should cover living expenses for a longer period.

Keep this fund in a place that's secure, quickly accessible and not in a long term time deposit account.

4. Build a worthy network.

When you're in a good job, don't remove yourself from the circle of valuable friends and professional colleagues. Keep them, make yourself useful to your network and continue to expand.

A good network is a lauchpad to greater things . Don't forget that there's no limit to the support a good friend could give in times of need. 

5. There's life after a job lose.

When you lose your job, sit down and take stock of your life. Don't panic! It's not the end of life!

There are always bigger and better things ahead. You can rise from the ashes of a job loss to live your dream llife, become a role model and a source of inspiration to thousands or even millions of people 

The proposed common currency, the "sur": What investors should expect.

 Argentina and Brazil are set to begin preparatory work to establish the second largest currency bloc in the world. The name suggested for the new currency is "sur". 

The "sur" when it officially becomes a medium of exchange in the two largest latin American economies, would facilitate comparisons of prices and other key investment decision parameters. 

What else should investors expect?

A look at lessons from "euro", the largest currency union would be helpful.

The euro eliminates currency risk within the eurozone. It facilitates and promotes cross border invesments by businesses. Businesses operating in both Argentina and Brazil would no longer face currency risks if and when sur becomes a daily currency in both countries.

Elimination of currency risks and facilitation of price comparison would enable cross border businesses in the two countries to lower costs and increase profits. How?

Businesses would have a range of best deals from suppliers to choose from. They would also use the ease of labor mobility to easily move their best hands between both countries. 

They would have the enabling environment to create packages that attract best hands from competitors within the currency union.

There's also enjoy benefits deriveable from the possibility of currency stability. One of them would be the lowering of interest rates and the increasing of the possibility of appropriate capital allocation between subsidiaries. 

However, during a period of depression in a partner currency, economic growth would slow down and unemployment would increase. When this happens, investors would become apprehensive about liquidity. 

A shrinking in the volume of cash in circulation would cause interest rates to rise. The common currency policy is unlikely to allow a partner country to unilaterally print more money, inject it to stimulate the economy and reverse an economic depression. Businesses would have to cut jobs and eventually, die if the situation persists.

Balancing the budget is like going to heaven. Everybody wants to do it, but nobody wants to do what you have to do to get there.– Phil Gramm.

Every budget is a test of your capability to balance your expenses and your income.

It's a tough test that many of us fail. The reason is simple, most of us are never prepared to live within our means.

Most of us when we have a little, we want to prove to those who don't really care about us that we have arrived 

and when we're sent packing from the heaven the people built for us, we go outside our means to buy mansions in the hottest part of hell in attempt to prove to the world that we are still in heaven.

Who really cares about where you're , what you have and how you are at any time of your life?

Maybe your loved ones, outside them you're alone.

So, if you want to balance your budget and achieve financial freedom,

you've to die to what people think of your lifestyle, how they live without fiscal discipline and live within your means.

Special Purpose Vehicle, SPV, Isn't Always Created To Commit Financial Fraud.

What's the primary job of every entrepreneur? Take profitable risks, do everything legitimate to at least preserve capital when profit can't be made.

This job wouldn't be done when a business survives the volatile early stage, breaks even, enjoys profitability for few years and then goes bankrupt as a result of venturing into risky ventures. The going concern concept would be defeated. 

So, what long term business survival options do some entrepreneurs pick to preserve their assets when they go into volatile ventures? One of them is the Special Purpose Vehicle (SPV) also known as Spechial Vehicle Entity (SPE).

A special purpose vehicle or special purpose entity is defined as a subsidiary created by a parent company for a special purpose.

The special purpose most often, is to isolate a parent company from financial risk by providing securitization of assets 

The above is made possible by the fact that SPV has Its legal status as a separate company. This status makes its obligations to secure its assets in the eventuality of the parent company going bankrupt possible. This is why SPV is sometimes called a bankruptcy-remote entity.

As a subsidiary with a legal entity status, a SPV has its own distinct balance sheet ( a picture of its assets, liabilities and capital) that's often off the balance sheet of the parent company. This is where investors have a problem with SPV, as it could be exploited to hide losses

However, some businesses create SPV for one purpose, to aecuritize debt and give investors the assurance of repayment. And not always to commit financial fraud 

Learning Curve Theory

A worker is likely to gain experience, become more efficient and faster as they carry out a repeated performance of a job task. Human beings improve skills, gain experience, exposure and specialize as they repeat the performance of a particular task. This is known as the learning curve effect.

A worker with the no previous experience and knowledge is untried the first time they perform a new operation. As the worker repeats the operation and becomes more familiar with it, their labor efficiency increases and their labor cost per unit decreases. After the passage of time, the regular rate of decline in cost per unit is established and used as a basis to predict future labor cost..

The learning process begins at the point the first unit comes off from the production line. And each time cumulative production is doubled, the average taken to produce a unit of cumulative production is a percentage of the average time of the previous cumulative production.

What is the learning curve theory?

The learning curve theory says that whenever a repetitive task is performed, the average time spent to produce a unit falls by a specific percentage as the activity level is doubled. For example, there is a learning phenomenal of 80% for a 20% decline in average time and a 75% learning phenomenal for a 25% decline in average time.

The learning curve is the mathematical expression of the phenomenon that when a complex and labor intensive procedures are repeated, unit labor times tend to decrease at a constant rate.

Naira Redesign, Withdrawal Limits And Credit Worthiness of Nigerians.

 

Currency redesign by the Central Bank of Nigeria and its complementary withdrawal limits have come to stay.

The recent news from the Central Bank of Nigeria (CBN) is an indication of the near irreversibility of the policy implementation. The news claimed that volume of currency in circulation, not in vaults of banks has dropped by at least 5 percent in just one month.

So withdrawal limits are going to be enforced to the letter but Nigerians may not have the luxury of time (Senate is urging CBN to set June 30, 2023 as the new deadline). 

In the event of no deadline extension beyond January 31st, 2023, how're Nigerians going to make urgent purchases above weekly withdrawal limits? Or even make long term arrangements?

Financial transactions are often done on two bases, cash and credit. In many economies, where individuals take their creditworthiness serious, most financial transactions are done on credit basis. In Nigeria, it's mostly on cash basis and soon, this is no longer going to be possible for transactions that involve a lot of money. 

Payments for large purchases would be made mostly either through the online banking channel or on installmental basis (this is where trust or positive goodwill would be a major consideration).. 

The installmental payment arrangement would force many Nigerians to pay serious attention to their creditworthiness. The time to start doing that is now.

Nigerians have to begin to build their capacity to meet current maturing liabilities (pay what's due as at when it's due). To build this capacity successfully, Nigerians would have to learn to make budgets and stick to them.l (time for strict fiscal discipline).

Budgets should include amounts and time to pay all outstanding current liabilities. When you think other distractions may cause you to forget, give your banker standing orders to effect payments to your creditors when they fall due. Failure to pay what is owed at agreed time would not improve credit worthiness. 

Don't buy on credit and make an arrangement to pay installmentally in anticipation of a cash inflow that is not regular. Credit purchases and commitments to pay should be tied to only regular income. 

When you fail to pay up when payment is due, it affects the business of a creditor negatively. The creditor may no longer have the fund to restock and continue in business. 

And when the creditor is forced to go out of business because of indebtedness, the world would get to know about how seriously unworthy of credit some people are (bad character, bad publicity). Make sure your name is never on that list.