Project Management
IEE04 : Project management
Feb 2013 A. Explain the following four major components of cost of project…………. aug12,feb12 1. Material Cost 2. Utilities cost 3. Labor cost 4.Factory overhead cost Ans: 1. Material Cost: the most important element of cost, the material cost comprises of the cost f raw material, chemical, components and consumable stores required for production. It is a function of the quantities in which these materials are required and the prices payable for them. While estimating the material cost, the following points should be borne in mind: 1. The requirements of various material inputs per unit of output may be established on the basis of one or more of following a) theoretical consumption norms B) experience of industry c) performance guarantees d) specification of machinery supplies. 2. The total requirement of various material inputs can be obtained by multiplying the requirements per unit of output with the expected output during the year. 3. The price of material inputs are defined in CIF (cost, insurance, freight) terms. 4. The present costs of various material input is considered. 5. If seasonal fluctuation in prices are regular, the same must be considered in estimating the cost of material inputs 2. Utilities cost: Utilities consists of power, water and fuel. The requirement of power, water and fuel may be determined on the basis of the norms specified by the collaborators, consultants etc. or the consumption standards in the industry, whichever is higher. The cost of power shown here would include only the cost of bought out power and it may be estimated on the basis of power tariff structure of the concerned electricity board. the cost of captive power would naturally be reflected in the cost of fuel. The cost payable to local authorities and charges payable to some other firms for water supply may be shown separately. The cost of fuel often an important item, is somewhat more difficult to estimate. 3. Labour cost: Labour cost is the
Feb 2013 A. Explain the following four major components of cost of project…………. aug12,feb12 1. Material Cost 2. Utilities cost 3. Labor cost 4.Factory overhead cost Ans: 1. Material Cost: the most important element of cost, the material cost comprises of the cost f raw material, chemical, components and consumable stores required for production. It is a function of the quantities in which these materials are required and the prices payable for them. While estimating the material cost, the following points should be borne in mind: 1. The requirements of various material inputs per unit of output may be established on the basis of one or more of following a) theoretical consumption norms B) experience of industry c) performance guarantees d) specification of machinery supplies. 2. The total requirement of various material inputs can be obtained by multiplying the requirements per unit of output with the expected output during the year. 3. The price of material inputs are defined in CIF (cost, insurance, freight) terms. 4. The present costs of various material input is considered. 5. If seasonal fluctuation in prices are regular, the same must be considered in estimating the cost of material inputs 2. Utilities cost: Utilities consists of power, water and fuel. The requirement of power, water and fuel may be determined on the basis of the norms specified by the collaborators, consultants etc. or the consumption standards in the industry, whichever is higher. The cost of power shown here would include only the cost of bought out power and it may be estimated on the basis of power tariff structure of the concerned electricity board. the cost of captive power would naturally be reflected in the cost of fuel. The cost payable to local authorities and charges payable to some other firms for water supply may be shown separately. The cost of fuel often an important item, is somewhat more difficult to estimate. 3. Labour cost: Labour cost is the