CEM
These are the costs associated with the personnel on the project. They include salaries and the cost of benefits (such as vacation time and health insurance) if they apply. Employee or contractor salaries and expenses are one of the biggest budget items on any project. The people costs can either form a part of direct or indirect costs. This depends on the activity undertaken by the individual person. So, if the work undertaken by a person can be directly attributed to a project activity it is a direct cost. Administrative costs are the everyday costs that support the work of the project but are not necessarily directly related to a specific task on the project. Phone expense, copier paper, heating expenses, and support personnel are examples of administrative costs. Project teams have to work and meet somewhere, so that means that there is some sort of facilities expense in the form of rent, lease, or mortgage payments. If the building or facility was leased or purchased specifically for the project, it would be classified as a project cost instead of an administrative cost. Administrative costs are part of the indirect costs of the project Resource and project costs include things such as materials needed for specific tasks, equipment leases, travel expenses, and so on. These expenses are specific to the project. Resource costs are typically the largest expense and estimating these costs will require research by the project manager and team. If you as the project manager have initial budget input or responsibility for creating the initial project budget, then careful examination of each of these categories will help you come up with a reasonable budget for the project. If not, being aware will help you identify what may have been missed and it will certainly help you as you manage the project budget on an ongoing basis throughout the engagement. Direct costs include costs such as salaries, equipment rentals, software, and training for team members. Any cost that can be directly attributed to a particular activity of a project is a direct cost. Direct costs =Cost specifically related to a particular activity of a project. Indirect costs are not specific to the project. When your project team works with other members of the organization who are not working on the project in the same building, things like the lease cost of the building would be considered an indirect cost because it is not specifically related to the project. Another indirect cost would be administrative staff who will be assisting you with project activities but aren't assigned specific project tasks themselves. Indirect costs = Costs associated with the project but not directly related to a particular activity of the project. Indirect costs also include the penalties for late completion of the project and benefits for early completion. Project indirect costs are a function of time i.e. the longer the project takes to complete the higher are the indirect costs associated with it. On the other hand, in an effort to reduce the indirect costs we may increase the direct costs as they are indirectly proportional to the duration of the project. Longer the project duration lower are the direct costs and vice versa. This means that longer project durations lead to higher indirect costs but lower direct costs. The activities on the critical path need to only be taken into consideration as they determine the project duration. Crashing of non-critical activities would not prove useful as it will not assist in reducing the project duration. Once the critical path is crashed a new path may emerge as the critical path. If during the course of the crashing if there are more than one critical path then the activities that are common to them should first be taken up for crashing. The crashing is done for one unit of time i.e., a day, week, etc. Step 1: The first step in crashing is to identify the critical path and then select the activity that has the minimum incremental cost of crashing. Step 2: Once the activity with the minimum incremental cost of crashing has been crashed a new critical path may be created. The critical path is again identified and the same procedure is applied. Compression of a pastime refers back to the discount with inside the period of a pastime through growing the assets allotted to it or through decreasing the technical specification of the work. The technique of shortening a venture is known as crashing and is commonly finished through including more assets to a pastime. Decompression is the method of restoring compressed statistics to its authentic form. Data decompression is needed in nearly all instances of compressed statistics, consisting of lossy and lossless compression. The project network diagram and particularly its critical path contain valuable information about the duration of the project, the critical activities, the non-critical activities and the various floats associated with these non-critical activities. This information can be used to find ways to expedite the project and then study its effect on the cost of the project. The effect of expediting the project activities on its cost is referred to as time-cost trade-off. Construction costs form a part of the overall costs incurred throughout the development of a constructed asset consisting of a building. Very broadly, production costs could be those costs incurred through the actual production works themselves, and on some projects can be decided through the value of the agreement with the important contractor. However, the production agreement might also additionally include costs that won't in themselves be taken into consideration literal production costs (hard costs), consisting of fees, profits, overheads, and so on. Many projects can even include costs that it isn't viable to decide whilst the production agreement is offered (consisting of high price sums and provisional sums), and there can be production works which can be offered through the client out of doors of the important agreement (consisting of becoming out the interior, minor alterations to the completed works, installation of equipment, and so on). In addition, the agreement is possibly to permit for the agreement sum to be adjusted as a result, for example, of variations to the works, claims for loss and expense, or fluctuations (a manner of dealing with inflation on large projects that could ultimate for numerous years). It is due to those unknowns that clients are cautioned to keep a contingency.
Unit - 8
Construction Costs
Q1) Explain about People costs?
A1)
Q2) Explain about administrative cost?
A2)
Q3) What is Project Resource cost?
A3)
Q4) Explain Direct and indirect cost?
A4)
Q5) Explain Rules of crashing?
A5)
Q6) Explain the steps followed in crashing?
A6) Steps followed in crashing are as follows:
Q7) What is mean by Compression and Decompression?
A7)
Q8) Explain Time Cost Trade off in construction?
A8)
Q9) Explain Makeup of construction cost?
A9)
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