planningcosts-blog

[planningcosts-blog]

What Is Cost Planning?

Construction cost is one of the trickiest things you have to deal with when doing some construction work with any contractor. The thing is, you may want the best quality without really going overboard with your budget allocation for that particular construction. Also, if you are more flexible and want to know how much you need to save up for in order to accommodate all the construction costs, you will have to have a good estimate which is close to the actual value.

Cost Planning Process: Explained

Cost Management provides robust support for planning, costing and analysis of manufacturing costs. It allows you to determine which work definitions to use in costing, efficiently enter material, resource, and overhead costs using spreadsheet import, and perform cost roll up. You can use multiple simultaneous costs, for example, one for official external reporting, and one for your internal simulations. It offers flexible, user defined account defaulting rules and valuation policies using cost profiles. In terms of cost analysis, you can view costs by work order, operation, cost element, and variances.

The following topics describe the cost planning tasks:

Configuring Item Attributes to Enable Costing

Estimating Standard Costs

Managing Resource Rates

Managing Overhead Rates

Estimating Standard Costs for Assemblies

Cost Processing for a Deactivated Work Definitions

Read more at - Oracle.

Cost Planning Features

Cost planning typically involves two features. The first is an overall budget for the project. This is the total amount that the project is expected to cost. This amount is based on the current project scope and design and can be determined through various types of estimates. The second feature of cost planning is the allocation of costs over time. This involves predicting when along the project schedule costs will actually be incurred and paid.

Cost Planning Benefits

A central benefit of cost planning is that the owner is aware of financial expectations. This allows an owner to secure the proper financing and business plan. Without cost planning, owners would not know if a project is expected to be profitable. Additionally, cost planning allows an owner to properly structure a construction loan. Instead of borrowing the total project cost upfront (and beginning to pay interest on the total immediately), cost planning allows an owner to borrow only what will be spent in a particular period and to avoid paying interest on the balance until it is received...visit - Careertrend to know more.

Cost estimating

Cost estimating is the predictive process used to quantify, cost, and price the resources required by the scope of an investment option, activity, or project. It involves the application of techniques that convert quantified technical and programmatic information about an asset or project into finance and resource information. The outputs of estimating are used primarily as inputs for business planning, cost analysis, and decisions or for project cost and schedule control processes.

Cost budgeting

Budgeting is a sub-process within estimating used for allocating the estimated cost of resources into cost accounts against which cost performance will be measured and assessed. This forms the baseline for cost control. Cost accounts used from the chart of accounts must also support the cost accounting process. Budgets are often time-phased in accordance with the schedule or to address budget and cash flow constraints...for more info, visit - Cost Management.

Determining the Project Budget

The second component of the cost plan is the budget, which sums up all of the itemized costs. Of course, the more experienced you are in your field, the more precise your budget can be. As a rule of thumb, you should expect your project to go over budget somewhere.

For this reason, some project managers give themselves a buffer, including a "+/-" estimate for some areas in the budget. For example, if the cost of materials fluctuates from week to week, a "+/- 10 percent" buffer can help that portion of the project to stay on budget.

Specifying Project Cost Controls

The third component of the cost plan is cost controls. Again, the specifics of this part of your plan will depend on the project. For a three-month project, a weekly review by management could help ensure costs stay within estimates. For a three-day project, a daily review of costs would be more appropriate.

In some cases, you may be able to get pricing guarantees from suppliers. If you are hiring outside contractors for a portion of the project, you may be able to pay them a flat fee rather than an hourly wage depending on your state's labor laws...go to - BizFluent to know more.

Furthermore, a new financial benefit has developed where companies can now avoid many of the high-cost professional fees related to generating a construction safety program when they take advantage of on-line template opportunities. Visit - Accent Estimating to know more about building estimating service.