Why Cost Management is Important?
Cost Management is important because it:
You start cost management process in the planning phase of the project. Costs are approved by project owner and executive stakeholders in the project charter. As project is executed you monitored the expenses. At the close of the project you compare the actual costs to the estimated costs determined at the beginning of the project. Cost management is one of the triple constraint metrics that define a project: cost, scope and time.
Example of some of the fixed and variable costs, are shown in the diagram below:
What is Cost Management?
The process of Cost Management is:
Cost Management Plan
Cost Management Plan is a component of the overall project management plan.
The better you are at cost precision and accuracy the better you’ll have control of your project costs. You control cost thresholds by knowing the cost variations and where you have wiggle room and where you don’t.
Establish how the project performance will be measured in order to see if you’re meeting the goals and expectations of the project.
Inputs into Cost Management Plan
Tools and Techniques in Cost Management Plan
Outputs of Cost Management Plan
As part of Cost Planning is you have to plan for resources. Resource planning is the process of determining future resource requirements for an organization or a scope of work. This involves the evaluation and planning of the use of the physical, human, financial, and informational resources required to complete work activities and their tasks. Resource planning begins in the scope and execution plan development process during which the work breakdown structure, tasks and execution strategy are developed. Resource estimating determines the activity’s resource quantities needed, such as hours, tools, materials. While schedule planning and development determines the work activities be performed. Resource planning takes the estimated resource quantities, evaluates resource availability and limitations considering project circumstances, and then iteratively optimizes how the available resources will be used in the activities over time.
Cost Estimation is the process of quantifying the cost and price of the resources required by the project. The outputs of cost estimating are used as inputs for business planning, cost analysis, and decisions or for project cost and schedule control processes. The estimation of the time duration of activities must be considered concurrently with costs because costs are often dependent on time duration and resource requirements identified in cost estimating may affect the schedule. Iterative approaches are used because outcomes of a cost estimate often lead to changes in scope or plans. Estimating process can be viewed as part of the scope definition process because iterative trading off between cost and scope intertwine the processes.
Inputs into Cost Estimation
Tools and Techniques of Cost Estimation
Outputs from Cost Estimation
Cost Budgeting is a sub-process within the cost estimating and is used for allocating the estimated cost of resources into cost accounts against which cost performance will be measured and assessed. Cost Budgeting forms the baseline for cost control.
Inputs into Cost Budgeting
Tools and Techniques of Cost Budgeting
Outputs from Cost Budgeting
During Cost Control you measure the variances from the cost baseline and take necessary corrective action to achieve minimum costs. All of the changes to the cost baseline need to be recorded and the expected final total costs are continuously forecasted. When actual cost information becomes available you measure against the cost baseline to explain and determine what is causing the variance. Corrective action might need to be taken based on this analysis to avoid cost overruns.
Inputs into Cost Control
Tools and Techniques of Cost Control
Outputs from Cost Control
Now that you got the cost management is under your belt. You can be confident in managing your projects.
Have You Ever Wondered How To Make Others Do What You Want To Do Without Having Authority Over Them? I Can Make You Do That – Because!
Having people do certain things without having authority over them is difficult to say the least.
One can use the Carrot and Stick approach. A Carrot and Stick approach is a traditional motivation theory that asserts, in motivating people to elicit desired behaviors, sometimes the rewards are given in the form of money, promotion, and any other financial or non-financial benefits and sometimes the punishments are exerted to push an individual towards the desired behavior.
A better approach would be to use Because approach.
Ellen Langer, a professor of psychology at Harvard, conducted a research in 1978 on the power of persuasion of the word "Because."
Langer had people request to break in on a line of people waiting to use a busy copy machine on a college campus. In 1970′s people didn't have home computers nor printers. There were lines waiting to use a copy machine.
The researchers had the people use three different, specifically worded requests to break in line:
Did the wording affect whether people let them break in line?
Here are the results:
Using the word “Because” and then giving a reason resulted in significantly more compliance. This was true even when the reason was not very compelling such as “Because I have to make copies". The researchers hypothesized that people go on automatic behavior as a form of a heuristic method of short-cut, and that hearing the word “Because” followed by a reason, no matter how poor it was, would cause them to comply.
They repeated the experiment for a request to copy 20 pages rather than 5. In that case, only the “Because I’m in a rush” reason resulted in increased compliance.
So, what does this all mean? When the stakes are low people will engage in automatic behavior. If your request is small, follow your request with the word "Because" and give a reason, any reason. However, if the stakes are high, then there could be more resistance, but still not too much.
Please let me know how this “Because” approach worked out for you. Because I asked nicely.
In the Part 2 of this multi series article we have discussed:
We will conclude this article series with what it will take for organizations to Succeed in incorporating a permanent remote component into your organization’s work environment.
In the last 20 years, we've had six significant threats - SARS, MERS, Ebola, avian influenza and swine flu. Modelist and scientist don’t agree if the next wave of COVID-19 will be as deadly as this current outbreak. But most agree Coronavirus is not the last pandemic, BBC.com, 2020.
Organizations must be ready.
I’ve created organizations Checklist for incorporating a remote component into work environment:
Technology tools selection and standardization of for remote employees.
Workspace at Home equipment selection and standardization for remote employees.
Management training on technology and communication.
Remote employees training on technology and communication.
Out of Scope
If telecommuting will continue once a vaccine is introduced and physical distancing and imposed quarantine are removed.
If telecommuting will be employee’s personal choice.
Whether staff feel confident about the safety of their work environment and the productivity that can be achieved either from home or from the workplace.
Retention of top employees.
Employer of choice for future employees.
Retention of Clients or Members.
Equipment for Home Office.
Management training on technology and communication.
Employee training on technology and communication.
Your organization will be the Employer of Choice.
Retention of employees.
Organization’s KPIs at the same or above levels.
Create a Project Plan to identify the tasks, dependencies, duration, responsibilities and the scope.
Include Tasks such as:
Measurable KPIs to Goals
Align measurable key performance indicators (KPI's) tied to organization’s overall goals. This way you can more easily measure productivity and performance.
Develop task-related processes such as setting clear goals and standards.
Communication, Communication, Communication
Regularly communicate amongst all employees. This brings people together and fostering a sense of inclusion. Whether employee is on site of offsite regular contact helps build trust and confidence among team members. This provides ongoing opportunities for input and influence. Set expectations and accountability practices right from the get go.
Manager must communicate and encourage their employees to take the needed brakes and not get burnout.
Establish Performance Standards
Departmental leaders – you know what your department’s needs. Set benchmarks, sharing best practices, articulate standards by which your team’s performance will be evaluated.
Foster an atmosphere of collaborative atmosphere in your team. Teams with collaborative mindset bring to the best of competition and cooperation, fostering respect for all team member with different interests, talents, and expertise. Focus on dynamic discussion of differences verses disagreement. It encouraging a focus on shared goals and mutual wins.
Teams need to understand their reason for being. It allows teams and individuals in teams to ensure their focus is on delivering the right things to the right people at the right time in the right way. Team's Purpose is even more important for working remotely. Employees need to understand what specific results are expected, and how they contribute to the team as individuals and to the larger enterprise as a whole.
Help telecommuters and other remote employees feel like they’re part of the team. Have a clear set of policies that brings telecommuting staff into key meetings. Periodically have remote team members come into the office. Make an extra effort to keeping telecommuters in the loop on company and department news, via corporate portal/emails. This is especially important if they spend a significant amount of time working off site.
Selecting the Right Technology Tools
Microsoft Teams, Slack, Trillo, Google Hangouts and Skype for Business are some of the platforms that telecommuters can use to keep in touch throughout the day. And file-hosting services like SharePoint, OneDrive, or organization’s in-house portals can support collaboration and information sharing in real time. Technology like virtual desktops may replace bulky laptops and computers, enabling mobility inside and outside of an office building.
Creating the Right Workspace at Home
Your facility department will play an important part in creating an ergonomic working space at home by selecting the right: desks, chairs, monitors, phones headsets.
Address Fairness for On Site Employees
No one likes to be treated unfairly. Make sure that those who work on site are treated equitably. It can feel like a raw deal for the employees who are left to handle problems that can’t be performed remotely by telecommuting teammates.
When it comes to job performance quality and deliverables, there should be no difference between the work an employee produces at the office or while they’re remote. Set equal standards for onsite and offsite employees with respect to office hours, responsiveness for emails and phone calls to external clients an internal stakeholder. Set core hours when all employees are required to be accessible.
Create and update your Telecommuting Policy periodically. Over time, your guidelines need modification as technology progresses and the workplace practices continue to evolve, additional groups of employees can be offered remote work option.
Addressing the Legality
Compliance and legal counsel should review any telecommuting programs to make sure the organization stays in compliance with employment laws. Some of the issues to consider include workers compensation and state overtime regulations, as well as the company property used offsite and individual responsibilities.
Training of Management
According to Gallup, 2017, successful managers all stressed the importance of getting to know their employees as people and well as genuine caring for them as individuals.
Training should include:
Managers know which job functions are most suitable for remote work, and therefore, are in the best position to customize the program for their teams. Manager will decide whether all their staff working remotely, or a certain percentage of staff remote, or having staff work remote on specific days, or a hybrid between working in the office and at home.
Questions that a manager might consider when evaluating whether a role is a good fit for remote work include:
Is this position really right to independent work?
Does the job require a lot communication that face time/videoconferencing alone can’t support effectively?
Is there’s a negative impact, if any, on our teamwork, on our organizational culture, if few or all employees telecommuted regularly?
In It's the Manager: Gallup, 2019, finds the quality of managers and team leaders is the single biggest factor in your organization's long-term success.
Managing of Telecommuters
Managers must reiterate that remote workers keeping similar hours and maintaining similar levels of productivity. Telecommuting employees need to feel confident that their manager believes they will work as hard as they would in a regular office. If you as a manager unnecessarily checking in several times a day with your offsite workers just to “see how things are going,” those employees may feel like you don’t trust them.
Management should not just celebrate the end of the project but small wins as well. Feeling like a team means not just working together but being recognized for each members' sacrifices and accomplishments. Bringing your whole staff together at one location on occasion can help to build camaraderie and team spirit, while keeping social distancing in mind. If that’s not possible, try scheduling a videoconference on an annual basis using a platform like Microsoft Teams, GoTo Meeting or Zoom.
we have discussed:
In this part we will discuss what needs to be Mitigated when incorporating a remote component into work environment.
Telecommuting can damage some of the social benefits of the traditional office. We as humans are social beings and need to be around people.
Leaders, Managers, Project Managers need team skills and effective leadership skills, or their virtual teams can become ineffective and dysfunctional.
Feeling of Being Left Out
Offsite team feeling left out when the core onsite team have “clicks” and meet without including the offsite teammates. When having an onsite meeting make an effort of using telecommunication to include your offsite teammates.
Employees who telework may feel pressure to produce more output in order to be seen as valuable. Offsite employees work more in order to reduce the idea that they are doing less work than their onsite counterparts. Gallup, 2019, study found nearly 8 in 10 experience burnout on the job at least sometimes.
Not Feeling Safe Working on Site
Employees may not feel safe coming to work because of the air born viruses. That is why buildings will need to incorporate Smart Technology. To reduce the spread of airborne disease building will need to incorporate smart components, and sensors are enabling spaces with a high degree of flexibility and adaptability.
Health screening processes at entrances will need to be incorporated such as installing thermal imaging cameras to identify people with elevated temperatures.
Buildings will need to incorporate heavier filtration for building’s HVAC systems to minimize air born particles.
Buildings will also need to incorporate optimization of space use. Physical distancing of desks may need to be separated. Also, consideration should be taken at looking at shared spaces. Adherence to a strict cleaning regime between occupants would need to be incorporated.
Meeting rooms will need to indicate maximum meeting occupants and remind people of physical distancing policies.
Buildings will need to incorporate smart devices such as voice activated elevators, touchless devices and doorways.
Employees Well Being
Organization’s will need to handle employees increased complaints such as: musculoskeletal pains, a decreased focus on diet and wellbeing including increased alcohol consumption, more cases of poor sleep and increased risk of exhaustion and increased mental health issues with people who worked from home, according to How Your Office Space Impacts Employee Well-Being, 2019.
Mental and emotional support will need to be provided.
Organization’s would also need to provide meditation rooms, to programs like mindfulness classes, to policies on flexible work hours.
Lack of secure policy and procedures result to customers/members Personal Information stollen. Rise in lawsuits and tarnished organization’s reputation. Organization’s already stretched IT would need to work overtime to mitigate these vulnerabilities.
In the final part of this series we will concentrate what organizations can do to incorporate a permanent remote component into work environment.
Having a Remote Work environment is a big undertaking for the organization.
In order to consume the best practices of incorporating remote work component into a company’s environment I created a multi series article.
In this part we will concentrate on:
A State of Emergency was declared and most likely your organization created an Emergency / COVID-19 Committee.
Much of the organization’s staff was moved remotely or the businesses closed out.
As things began to settle a bit, an Unpause Committee was formed.
Most likely your organization did not have a culture or environment that is conducive to a remote workforce.
To be an innovative organization and a leader you’ll have to incorporating remote working environment.
Alignment of Business Objectives / Business Value to Goals and KPIs
Now it’s time to align Business Objectives / Business Value to your company’s Innovation Pillars.
Your Primary Objective should be putting your employees in the best possible place to deliver on expectations while giving the best service to your customers/members. And incorporate a permanent remote component into your work environment.
Secondary Objectives should be:
Have clear procedures, policies and a standardized plan in place for the ongoing potential of a limited access environment.
Create fairness across job functions while remembering that every position has needs that are different.
Provide employees with the appropriate tools, including training.
Ensure productivity while remote ability and flexibility is guaranteed.
Always be ready for the need for potential changes in focus, work shifts and roles.
Keep staff involved and connected in the process.
Align all remote components to your companies Goals and KPIs (Key Performance Indicators). If your organization has both Front Line and Back Office those are your key audience.
Employer of Choice
Incorporating Remote Working will give your organization a competitive advantage. This will make your company an Employer of Choice.
According to Gartner, 2020, organizations can differentiate themselves from competitors by being an Accelerated Trend Leader in Telecommuting.
Remote work is here to stay. Gartner analysis shows that 48% of employees will likely work remotely at least part of the time after the COVID-19 pandemic, compared to 30% pre-pandemic.
Work Life Balance
What does this mean to your employees?
According to a 2009 study by MIT's Sloan School, well-managed virtual teams can potentially outperform teams sharing a location.
Another research conducted by Global Work Place Analytics, 2018, showed teleworking or remote working has increased the productivity of employees by up to 40%.
Forbes, 2017, according to State of Work Productivity Report two-thirds of managers reporting an increase in overall productivity from their remote employees.
Managers who engage their employees create an average 15% productivity bump - would save the company up to $8,000 per employee. That's an annual $4 million premium, for 250 employee company, according to Gallup, 2020.
Even Federal Government Going It
Federal Government with the bloating bureaucracy is leading in terms of Telecommuting with the signing of Telework Enhancement Act of 2010 into law. It provided a framework for U.S. agencies to offer teleworking as a viable option to employees. By increasing the number of employees who telework, the Telework Enhancement Act has three main objectives. 1) Improve continuity of operations, 2) Promote management Effectiveness and 3) Enhance work-life balance.
Reduction Operating Costs
Organizations will have reduction in operating costs. By reducing the office footprint and reduction in parking space footprint. A typical employer can save about $11,000 per year for every person who works remotely half of the time, Global Workplace Analytics.
Fewer Employee Sick Days
American Management Association (AMA), 2018, reveals that teleworking programs contribute to a 63% reduction in unscheduled absentees. The benefit is that if a sick person comes into the office there is the real chance of infecting others. This places a large pressure on workforce productivity because in offices the common cold, and other viral diseases, spreads very quickly infecting significant portions of teams and the workforce. And now more than ever with COVID-19 the results are much more sever.
If your business has a strong telecommuting program, you have a better chance of keeping women who are thinking of motherhood and those who are already have children at your company. By incorporating a remote work component into a company’s environment you are helping these women achieve their full potential. Now they don’t have to choose between Work or Family.
Lower Levels of Stress
According to Psychology Today.com, 2015, communing can be a major cause of stress. This is due to its unpredictability and a sense of loss of control. During commute commuters experience boredom, social isolation, road rage, and frustration from problems like traffic or delays.
Go Green for the Planet
Remote home is Environmentally Friendly. It reduced carbon footprint.
Decreased Chance of a Motor Accident
According to the Federal Highway Commission, 2018, the average number of miles per car accident for the average US driver is 165,000 of which 1 in 77 car accidents is fatal. A typical 30 miles per day commute would bring to 241,500 miles. This would mean an avoidance of car accidents and potentially saving employees life.
Next part in this series I will describe what organizations need to Mitigate when incorporating a remote component into its work environment.