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Cost Analysis

Transcript: COST IN PM PURPOSE Cost analysis is the most important thing to define after a project has been proved feasible Description Cost estimating is the practice of forecasting the cost of completing a project with a defined scope. It is the primary element of project cost management, a knowledge area that involves planning, monitoring, and controlling a project’s monetary costs. The approximate total project cost, called the cost estimate, is used to authorize a project’s budget and manage its costs. Types Cost in a Project can be divided into direct cost and indirect cost. They both affect the project in different ways and need to be considered thoroughly before proceeding with the project Direct costs: Examples of direct costs include fixed labor, materials, and equipment. Indirect costs: Examples of indirect costs include utilities and quality control. Incurred by the organization at large, indirect costs occur at the same time as the project, but are not necessarily caused by it. Next, the project manager will need to undertake the process of cost estimation, which is used to predict the resources needed to complete a project within a defined scope, and determine whether the project will be greenlighted. COST IN IT Redesign costs Coding architecture needs to be as general and decoupled from any technologies implemented. Future updates in outside technologies may cripple the current implementation, and thus create an increase in cost due to redesign hours Poor Planning When a project has a variable that is not considered it may affect the project in a way that it may be catastrophic, forecast and deep analysis must be done in order to achieve a great outcome Downtime Downtime may affect the projects earnings and time. So if you're dependent on outside technologies you need to have a backup plan for the given event these technologies have downtime COST PLANNING Cost in IT may be different due to the nature of the LOB. However, it still needs to be considered and a proper forecast has to be made to avoid unnecessary iterations that will increase the cost. DELIVERABLES Although not many people like it. Deliverables and documentation are extremely important to save time when analyzing software, code, APIs, etc. TIME MANAGEMENT PLANNING DESIGN IMPLEMENTATION RELEASE Any of these iterations needs to be planned to avoid re-iterations. However, there are some design patterns that require re-iterations Time management is really important in IT. The cost may increase significantly if not managed appropriately. SCRUM Trello, Monday, Agile CAUSES INACCURATE PROJECT COST ESTIMATES THE MOST LIKELY CAUSES OF INACCURATE PROJECT COST ESTIMATES Lack of experience Human resources Length of planning OTHER COMMON MISTAKES Not fully understanding the work involved in completing work packages: This is sometimes a problem for inexperienced project teams who have not worked on similar projects before. Expecting that resources will work at maximum productivity: A more appropriate rule of thumb is to assume 80% productivity. Dividing tasks between multiple resources: Having more than one resource working on a task typically necessitates additional planning and management time, but this extra time is sometimes not taken into account. Failing to identify risks and to prepare adequate contingency plans and reserves: Negative risks can both raise costs and extend durations. Not updating cost estimates after project scope changes: Updated cost estimates are an integral part of scope change management procedures, as project scope changes render prior estimates useless. Creating hasty, inaccurate estimates because of stakeholder pressure: Since project managers are held accountable for estimates, order of magnitude estimates are a much better choice than numbers pulled out of thin air. Stating estimates as fixed sums, rather than ranges: Point estimates are misleading. All estimates have inherent degrees of uncertainty, and it is important to adequately communicate these via estimate ranges. Making a project fit a fixed budget amount: The scope of a project should determine its budget, not the other way around. Other Common mistakes CONCLUSION The usefulness of a cost estimate depends on how well it performs in areas like reliability and precision. There are several characteristics for judging cost estimate quality. GOOD COST ESTIMATES Accuracy: A cost estimate is only as useful as it is accurate. Aside from selecting the most accurate estimating techniques available, accuracy can be improved by revising estimates as the project is detailed and by building allowances into the estimate for resource downtime, project assessment and course correction, and contingencies. Documentation: Since project managers are eventually held accountable to cost estimates, it is important that the assumptions underlying estimates are identified and recorded in writing, and that regular budget statements are provided. Thorough documentation precludes

Cost Analysis

Transcript: Literature Review Structural Performance CHOICE OF MATERIALS The buildings unlike the popular belief are found to be exceptionally strong under varying load conditions. The load is evenly distributed through layered printing internal supports. 3D printing might be combined with traditional reinforcement techniques. Steel rebar or other reinforcing elements can be embedded within the printed structure during the printing process for enhanced load-bearing capacity. The material used for printing plays a vital role. Concrete is a common choice due to its inherent strength, but other materials with specific load-bearing properties are being explored. We are planning to use Geoploymer Concrete. The fire resistance of this concrete is also found to be very high and also the structural integrity is also exceptionally very good.

Cost Analysis

Transcript: design by Dóri Sirály for Prezi Cost Analysis for The Green Teapot Shop

Cost Analysis

Transcript: Examples of Fixed Costs Importance in Budgeting Definition of Fixed Costs Analyzing Fixed Costs Impact on Profitability Fixed costs directly influence a company's profitability margins. As sales volume changes, understanding how these costs behave is crucial for maintaining healthy profit levels and making informed strategic decisions. Understanding fixed costs is essential for effective budgeting. They contribute to the baseline expenses that a business must cover, aiding in determining pricing structures and financial forecasts. Examples of fixed costs include factory rent, property taxes, and salaries for employees not dependent on output. These costs must be paid even if the business does not operate during certain periods. Fixed costs are expenses that do not change with the volume of goods or services produced. Common examples include rent, salaries, and insurance premiums, which remain the same regardless of production levels. Analyzing fixed costs helps identify potential savings and efficiency improvements. Regular review prevents financial strain and ensures resources are allocated effectively. Relationship with Production Levels Definition of Variable Costs Importance in Pricing Strategy Examples of Variable Costs Calculating Variable Costs Variable costs directly correlate with production levels; as more units are produced, total variable costs increase. This relationship is critical for businesses to manage cash flow and pricing strategies effectively. Variable costs can be calculated by adding all costs that change with production, such as materials and labor, then dividing by the number of units produced. This calculation aids in setting pricing and budgeting. Variable costs are expenses that change in direct proportion to the level of production or sales volume, such as raw materials and labor. Unlike fixed costs, these costs rise and fall based on operational activity. Understanding variable costs is essential in pricing strategies as they directly affect the profit margin of products. Setting prices above variable costs ensures profitability and covers fixed expenses. Common examples of variable costs include direct materials, production supplies, and commission-based wages. These costs vary based on the volume of goods produced or sold, influencing overall expenditure. Fixed vs. Variable Costs Decision-Making Considerations Influencing Factors Financial Implications Analyzing Breakeven Point Fixed costs remain constant regardless of production output, while variable costs fluctuate with production levels. Common examples include rent (fixed) and materials (variable). Understanding the financial implications of fixed and variable costs aids in setting pricing strategies and managing cash flow. High fixed costs can lead to financial strain in low sales periods. The breakeven point is where total revenues equal total costs, providing insight into the minimum sales needed to avoid losses. Fixed and variable costs play a vital role in this calculation. When making strategic decisions, businesses must weigh the impacts of fixed and variable costs on profitability. Understanding these costs supports better pricing and investment decisions. Cost structures are influenced by various factors including industry standards, market conditions, and operational efficiencies. These factors shape how businesses allocate their resources. Summary of Key Points Strategic Importance of Cost Analysis Future Considerations Q&A Session Final Thoughts Fixed costs remain constant regardless of output, while variable costs fluctuate based on production levels. Understanding both types allows businesses to manage budgets and improve profitability effectively. Future business strategies should factor in evolving costs, including inflation and market demands, to remain competitive. Regular cost reviews are essential to adapt to industry changes and maintain profitability. Cost analysis lays the foundation for informed financial decisions, helping to optimize pricing strategies and budget allocations. It enables businesses to identify profitable avenues and minimize waste. Engaging stakeholders through a Q&A session fosters transparency and clarifies uncertainties about cost structures. Open discussions can reveal insights that contribute to improved financial strategies. A thorough understanding of fixed and variable costs is crucial for sustainable business growth. Effective cost analysis drives profitability and ensures long-term success while mitigating financial risks. Cost Analysis Understanding Fixed and Variable Costs

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Transcript: Nobody knows babies like we do! Quality products . Good Customer service. Every Kid really loves this store.. BABYLOU ABOUT US About Us BabyLou was established in 2004. It has been more than a decade since we started, where we have ensured to take care of every need and want of every child and infant under one roof, true to the caption “NO BODY KNOWS BABIES LIKE WE DO”. Our benchmark is to provide 100% customer service and satisfaction and continue to deliver the same with a wide range of toys, garments and Baby Products. Play and Create We Are Best 01 02 03 Block games Building Blocks help Kids to use their brain. PLAY TO LEARN in Crusing Adventures Our Discoveries Enjoy a sunny vacation aboard a luxury yacht with the LEGO® Creator 3in1 31083 Cruising Adventures set. This ship has all the comforts you need, including a well-equipped cabin and a toilet. Sail away to a sunny bay and take the cool water scooter to the beach. Build a sandcastle, enjoy a picnic, go surfing or check out the cute sea creatures before you head back to the yacht for a spot of fishing. Escape into the mountains Disney Little Princes in Also available for your Babies..... Also... Out of The World… Our reponsibility BABYLOU…. Our Responsibility All children have the right to fun, creative and engaging play experiences. Play is essential because when children play, they learn. As a provider of play experiences, we must ensure that our behaviour and actions are responsible towards all children and towards our stakeholders, society and the environment. We are committed to continue earning the trust our stakeholders place in us, and we are always inspired by children to be the best we can be. Innovate for children We aim to inspire children through our unique playful learning experiences and to play an active role in making a global difference on product safety while being dedicated promoters of responsibility towards children.

Cost Analysis

Transcript: Cost Analysis Actual Costs VS $791.75 $913.62 $402.16 $257.98 $192.26 $281.66 $473.49 $223.29 $218.45 $3,754.64 Raw materials are consistent with the pricer. Overhead costs are high due to lack of sales. 60 pieces were tracked through production to account for labor and materials used During July 905 pcs were produced Maximum pieces produced = 2752 in Jan'13 Average pieces produced previous 19 months = 1500 pcs/mo All the pieces are accounted for July Overhead = $85,151.45 July 2014 Pcs Produced = 905 Overhead costs = $94.09 Per pc Q2 2014 Overhead = $289,905.85 Q2 2014 Pcs Produced = 2,674 Overhead costs = $108.41 Per pc Average Overhead per month= $93,764 Average production =1500 pcs/mo $62.51 Overhead per pc Best case scenario = 2500 pcs/mo $37.51 Overhead per pc Where's the problem? Conclusion Facts Costs Breakdown Goals of Analysis Overhead costs per Piece Comparisons Overhead Costs $9,961.00 Invoiced to Customer with a 2.5x Markup At this point we are at a 2.5x Margin Raw Materials July $56,955/905pcs $62.93 per pc x 60 = $3,776.02 Raw Materials Q2 $167,300.75/2674pcs $62.56 per pc x 60 = $3,753.60 Actual Materials Cost = $3,754.64 Average overhead cost per pc $64.70 (Actual, Best case, & Average) Moulding Art Mats Mounting Glass Supplies Labor Inbound Art Inbound Moulding Total Identify inconsistencies in margins Find cost discrepancies in raw materials Determine our net profit on a project Costs from Pricer $925.93 $912.50 $396.70 $261.37 $189.54 $285.00 $748.00 $120.00 $133.16 $3,972.20 Overhead costs in July = $94.09 per pc Summary: Total Costs: $3,754.64 - Raw Materials $ 259.25 - Freight $5,645.40 - Overhead $9,659.29 - Total Total Revenue $10,246.18 Gross Profit $6,232.29 OR 39.17% Net Profit $586.89 OR 5.73% PROFITS

Cost Analysis

Transcript: Cost Analysis Aman Kumar, Omar Abouelazm, Sherry Chi, Alex Le Cong, Jaylen Williams What is CBA? CBA 1. Cost - Identifying the total amount of costs for equipment, location, employment, etc. of your business CBA 2. Benefit - Recognizing the amount of revenue the business will make. 3. Analysis - Comparing the amount of costs and revenue to understand the profit the business will gain. WHY IS IT IMPORTANT? WHY IS IT IMPORTANT? MANAGE your costs KEY to your profits LAUNCH your business ESTIMATION Estimate - Develops and validates forecasts of costs. - A fundamental step in planning a business, strategy, program or project - Used to gauge a business’s financial position - Used to plan for upcoming years through the use of the estimations of the previous year’s financial data - Necessary for businesses in order to fully understand what they need to improve for the upcoming year EXAMPLE TAKE ANY BUSINESS... Costs Liabilities Assets Expected Profit Anticipated Revenue Cost Efficiency Cost Efficiency WHAT IS IT? WHAT IT IS... Cost Efficiency is the ability to spend less for the same amount or more Cost Efficiency is very important as it requires entrepreneurs to think more critically and understand their situations when dealing with costs FORMULA A formula for this is: Efficiency Ratio = Expenses / Revenue The formula for efficiency ratio is all about expenses divided by revenue, meaning how much you make compared to how much it costs you EXAMPLE AN EXAMPLE IS... An example of cost efficiency according to Simplicable is: “Manufacturing Cost per unit is the cost to produce one unit of a product to specifications. It is an important management accounting metric that is used to plan production and model profitability.” Weigelt, K. (n.d.). Lesson 21 Cost Analysis. Reading. Retrieved January 14, 2019, from https://thevillageschool.instructure.com/courses/4820/files/folder/2018_Lessons?preview=460334 Weigelt, K. (n.d.). Lesson 22 Cost Analysis. Reading. Retrieved January 14, 2019, from https://thevillageschool.instructure.com/courses/4820/files/folder/2018_Lessons?preview=460332 Weigelt, K. (n.d.). Lesson 23 Cost Analysis. Reading. Retrieved January 14, 2019, from https://thevillageschool.instructure.com/courses/4820/files/folder/2018_Lessons?preview=460330 INTERNAL SOURCES Sources Spacey, J. (2017, September 17). 5 Types of Cost Analysis. Retrieved February 6, 2019, from https://simplicable.com/new/cost-analysis M. (n.d.). Cost-Benefit AnalysisDeciding, Quantitatively, Whether to go Ahead. Retrieved February 6, 2019, from https://www.mindtools.com/pages/article/newTED_08.htm Efficiency Ratio. (n.d.). Retrieved from https://investinganswers.com/financial-dictionary/ratio-analysis/efficiency-ratio-2555 Employment, S. B. (2019, January 02). Giving an estimate instead of a quote. Retrieved from https://www.business.qld.gov.au/running-business/marketing-sales/sales/preparing-quote/estimate An Expert Guide to Cost Benefit Analysis. (2017, September 18). Retrieved February 8, 2019, from https://www.smartsheet.com/expert-guide-cost-benefit-analysis EXTERNAL SOURCES EXTERNAL SOURCES Kaplan, J. (2014, January 14). Cost Benefit Analysis. Retrieved February 8, 2019, from https://www.betterevaluation.org/en/evaluation-options/CostBenefitAnalysis Gartensein, D. (2019, January 28). Advantages & Disadvantages of Cost Benefit Analysis. Retrieved February 8, 2019, from https://smallbusiness.chron.com/advantages-disadvantages-cost-benefit-analysis-10676.html Watkins, T. (n.d.). An Introduction to Cost Benefit Analysis. Retrieved February 8, 2019, from http://www.sjsu.edu/faculty/watkins/cba.htm Spacey, J. (2017, September 15). 4 Examples of Cost Efficiency. Retrieved February 8, 2019, from https://simplicable.com/new/cost-efficiency Cost efficiency. (2016, April 17). Retrieved February 8, 2019, from https://en.wikipedia.org/wiki/Cost_efficiency 1. Interactive Cost Analysis Game: Split up into pairs and discuss cost analysis methods for each individual's business plan 2. Kahoot! : https://play.kahoot.it/#/lobby?quizId=d72c11e0-3944-4a39-b737-987652ea6cae GAMES GAMES

Cost Analysis

Transcript: Cost Analysis On the 08/06/16 fly from Melbourne to Perth at 22:50 and arrive at 1:05. Take a taxi/chauffeured car to Crown Promenade Perth. On the 09/06/16 get taxi to 65 Worrell Ave, High Wycombe, Perth, WA, AU to pick up campervan. Flights and Transport Prices: Flights in total are $1432, Campervan hire from the 08/06/016 to 21/06/16 is $1514.63 + $45.57 fees. Hotel for 1 night is 287 (4 people). Taxi/chauffeured cars are $550 max. Total for all is $3783.63 On the 21/06/15 drop off the campervan at 65 Worrell Ave, High Wycombe, WA 6057, during the hours of 8am to 4:30pm. Get taxi to relatives place. Fly to Melbourne at 00:40 arrive at 6:15 and get a taxi/chauffeured car home. Melbourne to Perth Holiday by Lexi Withers

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