Estimating Purchasing and Cost Control Essay Example | Topics and Well Written Essays - 1750 words

Estimating Purchasing and Cost Control - Essay ExampleCost management is an integral lead off of financial control and management in any for profit and non-profit organisation, notwithstanding the industry or sector. The equal applies particularly to the engineering and body structure sector in which the huge amounts of financial and other resources pumped must(prenominal) be accounted for to stakeholders such as the government, project funders and the public/customers.Unfortunately, for various reasons, many countries construction sectors lag fag end in the intent of cost control techniques such as the Cost Value Reconciliation (CVR) and take in Value (EV), two rather common methods of cost control. Many a stakeholder cites the technical skills and the huge resources requisite as the reasons many constructions firms and financial managers do not apply CVR in their cost control practices. around affected by the cost and skill requirements of CVR and other cost control techn iques such as CVR and clear Value (EV) are the small and medium-sized construction and engineering firms that wish the wherewithal to design and implement these techniques of cost control. The other reason for the little use of cost control techniques such as CVR and EV is the apparent lack of literary coverage and information on these methods, implying that stakeholders are not quite conversant with the metho.Nonetheless, these methods are in the main used in the construction and engineering industry to measure and monitor project progress, profitability and capital punishment for their strengths. One advantage of EV is that it is capable of combining the assessment of work cost, schedule and scope in a single integrated process or system. What is more(prenominal), Earned Value gives perfect information and forecasts on project problems, which are important contributory factors in project management. EV has been shown to affect project cookery and control aspects more even as it improves project scope and the analysis of project performance. EV is then a positive predictor of project success. The popularity of EV is evident in the many government contracts that are assessed development this method, more so in its application to assist substantiate contract disputes. This paper explores the use of cost control methods such as the Coat Value Reconciliation (CVR) and the Earned Value (EV) with regards to their strong point in providing information on costs, in the monitoring work progress, their benefits, ease of use, advantages and disadvantages. Practicing CVR and EV The importance of using these cost control methods in the construction and engineering sector is the uniqueness and the uncertainties that characterise each project. In fact, every project in the industry has its own set of challenges and hardships that affect not only their successful completion but also their effective use of the available resources. The uncertainties inherent in con struction projects contribute in losses and ultimate project collapse even for big, long-established, sophisticated and financially endowed constructors (Potts, 2008). With more sophisticated structures being ordered by clients every other day with the budgets getting tighter by the day, construction firms must embrace cost control and sound finance management to achieve their objectives. Just analogous any other cost control measures, CVR has several core elements or principles by which it is successfully utilise to give the required data. Important in CVR are the totals for cost and value, which are crucial in establishing a firms profitability (Sidwell, 2005). In this regard, CVRs major objective is to achieve accuracy time displaying a firms accounts. CVRs display of financial accounts and position is thus among the most accurate compared to other methods. It is thus quite apparent that CVR seeks to portray a firms statutory accounts as a legal obligation (Sidwell, 2005). Ad ditionally vital is CVR