Question

1. Managing material cost, worker productivity, and subcontractor requests for extra compensation are all project risks. Discuss how the tools or activities listed below can help manage these risks.

a. Weekly job cost analysis

b. Pre-award subcontractor proposal analysis for completeness and feasibility

c. Hard bids on material unit costs

d. Contracts for material purchase

e. Firm contract procedures for claims for additional costs f. Assigning risk to those best able to manage it

Answer 1

a) Weekly Job Cost analysis:

Job costing refers to the accounting of cost of material, labour and overhead for specific work or job. It allows a perfect way to trace the cost of specific individual work and reduce it to minimum for later jobs.

Thus to reduce the risk of material cost weekly job cost analysis is the best way. By doing it weekly it helps us to be up to date and keep a perfect track on ongoing work.

b) Pre award sub contractor proposal analysis for completeness and feasibility:

It refers to analysis of whole project with all specifications, limitations and scope before the project starts. It requires discussion with contractors and customer so that a joint agreement over contract can be made.

This reduces the risk of subcontractor extra compensation as contract was pre prepared and was along with his consent.

c) Hard bids on material unit cost:

Hard bid refers to the bidding in which the lower bidder wins.

Thus this creates the environment of competition among material owners and customer receives the lowest cost for materials thus reduces the risk of managing material cost.

d) Contracts for material purchase:

A proper contract should also be prepared for material purchase which includes cost, quantity and time. This should be prepared with consent of material owner and should be prepared before starting of project.

This reduces the risk of extra compensation for material cost demand thus manages the material cost of project.

e) Firm contract procedure for claim of additional cost:

Contract prepared beforehand should include the firm procedure so that no additional cost claim can arise during the project work.

This reduces the whole project cost and allows timely completion of project.

f) Assigning risk to those best able to manage:

Beside all the risk management there can be any risk which may arise during ongoing of project which needs to be removed effectively so that it do not effect our project.

Thus we require a perfect team ready for managing all the which occurs during the work.