How to conduct project cost management
How to manage project cost management? Simply put, it is to maximize the net cash flow of the project by open source and throttle to maximize the net cash flow of the project (cash flow into the cash flow). Open source is an increase in cash inflow of projects, and throttling is the cash flow of the control project. In the project construction period, open source is expanded to expand project financing channels, and ensure that projects can raise enough construction funds; the thrill is the necessary function of financing cost or cost, most economically. In the project operation period, open source performance is increasing the income, other business revenue, and investment income; the throttling is the operating cost of the project. In my country, the cost management of the project has always been the weak item management of project management, "open source" and "thrill" are always more, and there is less. For example, in the previous period, since there is no in-depth investigation, it is not possible to accurately estimate the cost of the project activities, causing the lack of open source; or due to the fund's fund "source" from the government or shareholders, it is not distressed, more talk It is not possible. Even some projects have no prediction and analysis of project cash flow and financial implementation, and decision-making mistakes are inevitable. Cost management's cash flow analysis is mostly from estimation and forecasting, with certain uncertainties, which may result in a decrease in cash inflow or cash outflow. Uncertainty cost management or risk cost management has become a weak item in my country's project management, and it is also the most concerned issue of many commercial bank loans. Even professional consulting companies or project management companies, mostly stayed only in simple quantial analysis and sensitivity analysis. This article focuses on the new method of probability analysis, earning value analysis and other project cost management. Project costs or investment estimation cost estimates are approximate estimates for the resource cost required to complete project tasks. The US Project Management Society (PMI) believes that there are three cost estimates: specification estimation: is a top-down estimation form, usually in the initial or information of the project. Parameter estimation: is a modeling statistics, such as regression analysis and learning curves. Self-assessment: By performing detailed cost of the project work package, the results are grouped through the cost account and work decomposition structure (WBS). This method is the most accurate. The concept of PMI cost estimates is often referred to as investment estimates in my country, ie, based on research on project scale, technical solutions, equipment programs, project programs and project implementation, etc., estimates total investment. The basis of the cost management of the project's cash flow analysis project is to prepare financial statements, mainly financial cash flow meters, profit and loss table, source of funds and use tables, borrowing repayment plan. Among them, the cash flow analysis of the project is the most important project management report. Through the financial cash flow analysis of the project, it can calculate the financial internal rate of return on the project, the financial net present value, the investment recovery period and other indicators, thus making judgments on the project's decision. (1) Financial internal yield (FIR) It refers to the discount rate of the current value of the net cash flow in the entire calculation period is a relative indicator of the profitability of the project. This indicator can calculate the net cash flow in the financial cash flow table, and the test method can be calculated directly using the financial internal yield function of Microsoft Excel software, and the resulting project finance internal yield and industry benchmark yield (IC) Comparison, if FIR> IC, the project profitability is considered to meet the requirements. (2) Financial Net Current Value (FNPV) It refers to the sum of the present values of the project by the reference yield IC to make the net cash flow in each year to the starting point of the construction. It is an absolute indicator for evaluating the profitability of the project, reflects the present value of the excess profit obtained outside the project to meet the profit requirements of the benchmark yield. It is also possible to directly use the financial net present value function provided by Microsoft Excel software.
If the FNPV ≥ 0, the project is acceptable for the profitability of the project to reach or exceed the baseline calculation. (3) Investment Recycling (PT) It is an important indicator that reflects the authenticity of the project, refers to the time required for all investments in the net income of the project. In the cash flow table, the cumulative cash flow is changed by a negative value of 0. The shorter the investment recovery period, the stronger the project's profitability and the risk of anti-risk. The uncertainty analysis of the project is selectively cleared, and the sensitivity analysis and probability analysis are selectively analyzed according to the specific conditions of the proposed project. (1) The balance analysis of the profit and loss is based on the product production (sales volume), fixed cost, variable cost, tax, etc. according to the normal production year of the project, and research the production, cost, profit between construction projects and the variation between the production. When the revenue of the project is equal to the cost, it is a profit and loss and balance point (BEP). Usually only linear profiling balance analysis is shown, shown below: (2) Sensitivity analysis It is a research project price, production, operating cost, investment, construction period, etc., project financial evaluation indicators (such as finance internal income The expected value of the expected value changes. Through sensitive analysis, you can find the most sensitive factors of the project, so that decision makers can understand the risk of project construction, improve the accuracy and reliability of decisions. It is generally compared to the absolute value of the curve slope of a factor. For example, the internal yield of a real estate development project is shown in the scope of construction investment and commercial housing price as shown below: From the above figure, it can be seen from the above figure, the financial internal yield is more sensitive to the change in construction investment and commercial housing sales prices. In contrast, the financial internal rate of return is more sensitive to the change in construction investment. (3) Probability analysis It is the quantitative impact of probability predictive uncertainty factors and risk factors on project economic evaluation indicators. Generally, the project evaluation indicator, such as the expected value of the project financial net present value is greater than or equal to the cumulative probability of zero. The larger the cumulative probability value, the smaller the risk of the project. Project earning value management earned value management (EMV) is a method in which project scope, schedule and resources, measurement project performance. It compares the workload of the program, how much is earning and actual cost cost, to determine whether the cost and progress performance meet the original plan. To make value management, you must be familiar with the interrelationship between planning cost (PV), earning value (EV), and actual cost (AC), and completion estimation (EAC). And the completion of the estimate (ETC) is needed. The earning value management is also inseparable from deviation management. Deviation = Program - The actual deviation analysis is shown below: When cost deviation (CV)> 0, it indicates cost savings; contrary, when CV <0 indicates cost overdraud. When the progress deviation (SV)> 0 indicates the progress exceeded; in turn, when SV <0 indicates the progress lag. In particular, this is the inference according to the deviation meaning of PMI, opposite the deviation in my country's engineering supervision investment control.
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