PROJECT COST – THE ELUSIVE FORMULA!

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PROJECT COST – THE ELUSIVE FORMULA!

In a country where the same product has different prices and at times the same buyer ends up paying different prices, more so the organizational buyers. Where economies of scale have not been integrated into the business process, thus there is no uniformity pertaining to this factor even for the same product. The proclaimed technical specifications and quality parameters testing of a large number of products by third party testers and validators of trust and credibility seems to be in the realm of the unheard. The situation is confounded by the services on offer at every level; from the blue to the white collar to the consultants of self-proclaimed expertise.

Despite the pathetic situation we are in, the project needs to be created for life, progress and businesses to go on. Economic development is primarily project based which extends to operations and maintenance, then scalability et al. So, the cost of the project is of greatest value to our existence and growth. We would limit ourselves to IT and related technologies projects. The first aberration which I encountered in the Project cost what the cost of the human resource. The quality of the resource, the pricing of the resource and the calculation of the effort and its costing. It seemed to be technical resource trafficking rather than a project resource calculation. So on one knows the basic premise, that you are working for the client being cost effective and delivering without time and cost overrun, while maintaining the quality.

All the cost components of the project ecosystem have got fully tuned and sucked into the quotation ecosystem. Necessarily, that is to be done but the component providers of the project should know what exact role those products  have in that project. Generic acceptability for the project component is not the most ideal fit. He remains unaware of the actual requirement. This leads to three different problems, one, the tech specs are hiked, second, the price gets hiked as a corollary and third, even with that it does not fit into the project as a cog in the wheel. Besides, the project cost getting hiked with the host of such components, the project execution friction adds  further to the project cost.

Approximation rather than calculating till the granular detail is the biggest liability. Because of lack of expertise, everybody wants to play safe. Playing safe comes with a cost to the Project. Is it not a waste of resources? The products nobody has mastery of, so the criteria is products which are most selling in the market or have a premium are generally adhered to depending on the cost of the project and who the client is. The expertise and product knowledge of the OEM is not used. Mercenary cost cutting  on every component of the project while indulging in reckless maximum pricing is the name of the game. The cost of the System Integrator mostly seems to be exorbitant compared to what he brings to the table. The most unfortunate thing is that his cost is hidden in the line items. What a tragedy? Whatever is left, the pujari completes the show. The pujari is the consultant to the project.

THE PROJECT COSTING HAS TO BE TRANSFORMED FROM AN ART TO A SCIENCE.

Sanjay Sahay

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