Question

Write about 200 words, How covid-19 affected the importance of cost estimation and cost control for project organizations. Support your answer with examples?

Answer 1

Covid-19 has affected the economy of world very badly.It even affected many businessess, companies, factories, project organisations,human resource team,etc.Project organisation is team which analyses projects offered to the organisation,estimates the cost and decides budget,then it selects potential members of organisation who are capable enough to complete the project by contributing skills and talent.Usually project organisation predicts the cost,so that the company can decide whether the cost of the project is exceeding their available budget or not.If the cost of project is exceeding the company's budget then the company can either extend their budget by taking loan or can reject the project.But,covid-19 has affected the cost estimation as project organisation is not able to estimate how much amount is required to complete project.Cost of scarce resources has turned inestimable as project organisation is not able to predict whether the price of resources and raw materials will increase or decrease.For example,construction field is affected and many projects are pending.Due to covid-19,construction team is not looking up to complete construction of buildings as there is non-availability of raw materials like cement,bricks,etc.Inspite of not attending and completing the construction work,workers,labourers are paid with salaries,wages.This exceeds the estimated cost and time limit as they are not able to complete project within the time.So,project organisation is not able to control and manage the cost according to estimated budget.Another example is even online shopping sites are affected with covid-19.Intially project organisations of these online shopping sites have already estimated the cost which includes rents of warehouses,transport costs,etc.But due covid-19,the cost of projects and bulk orders  have exceeded.As the goods cannot be delivered,they are stored in warehouses which increased the rent and project budget of bulk orders.Few orders considered of perishable goods too and loss has occurred to such companies as goods got spoiled.Project organisation couldn't control and estimate the costs of projects.

Hence,it turned difficult for project organisations to estimate and control the cost due to covid-19.Project organisation is not able to predict the cost of resources,raw materials,other activities.So the covid-19 has affected the importance of cost estimation and cost control.Previously,cost estimation and control was important for project organisation,but now it is not estimable and it is hard to predict the cost budget in current situation.