Project Management At The University
Project Overhead Costs
Direct costs are directly assigned to the project (Duke University, 2003-2005). These projected overhead costs reflect the total scope of the Cash Card laundry system to be installed at the University by Laundry Services Incorporated. There are also indirect costs involved that include Marketing, pamphlets for the students, licenses and insurance, and laundry room signs.
1. There will be 104 washers and 104 dryers installed.
2. The total cost for each washer is $450.
3. The total cost for each dryer is $400.
4. An estimate of $300 to truck machines to the locations.
5. There is a crew of six men at $12.00 per hour for each man.
6. Machine installation will take approximately 80 hours over a seven-week period.
7. The cost of IT wiring the building will be absorbed by the company at $2,500.
a. Including all parts and labor
Indirect Costs
Indirect project costs are parts of the scheduling that do not immediately involve the operation of the project. For instance, if you are building a garage for the neighbor, the gas that it takes you to drive to the building supply company does not entail the direct costs of the project. This is related to the indirect costs of the project. These are the projected overhead indirect costs.
• Marketing presentations– $500
• Pamphlets to students– $150
• Licenses– $600
• Insurance– $1,500
• Signs for laundry rooms– $250
Projected Direct Overhead Costs
104 Washers @ $450 per machine =$46,800
104 Dryers @ $400 per machine = $41,600
Machine delivery @ $300 = $300
Six men @ $12.00 per hour = $72.00
Installation hours (80)
Total labor for installation = $5,760
IT wiring (includes parts and labor) = $2,500
Total direct costs = $96,960
Indirect Overhead Costs
Marketing presentation = $500
Pamphlets to students = $150
Licenses = $600
Insurance = $1,500
Signs for laundry rooms = $250
Total indirect costs = $3,000
Total budgeted cost of project $99,960
In the projected overhead costs of the project, our calculations reflect the total direct costs of $96,960. The total indirect costs result is $3,000. This gives us the total budgeted cost of the Cash Card laundry system project. The total budgeted cost will be $99,960.
Time-Phased Budget
As the diagram suggests, the labor costs will be incurred during the first parts of the installation process. The wiring for the laundry rooms will be paid to the university from our company, in order to keep the Information Technology (IT) department in a positive and productive schedule. The installation of the machines will be expensed throughout the seven-week period of the project evenly to pay for the installation crews wages.
Cost Cutting
If there is a need for cost cutting in this project, our company has agreed to take a loss on the sale of 10% of the washers and dryers. In other words, they will give the university twenty of the machines that are theirs to keep. If the contract is not renewed later, then the machines are the universities property. They will also try to cut the work force down by two people during the install if everything seems to be going at a faster than normal pace.
1. This means a savings of $9,500 from the sale of the machines
2. This also means the drop of $1,920 in labor charges
Project Risks
Project risk is “the cumulative effect of the chances of uncertain occurrences which will adversely affect project objectives” (Wideman, 2002). One large risk that is involved with this project at the university is the problem with cash machines on the campus property. These machines can hold up to twenty thousand dollars at one time. This means that they are susceptible to burglary and attempted burglary. Our contingency plan for this type of risk is that we encase them in cement, install security cameras, and our company will have the only key for money collection purposes. Another way that we can avoid this risk is by installing these cash card machines indoors on the campus; where daytime admittance is the only time they are accessible.
Another risk that is smaller, but still a risk, is the lost or stolen cards from the students. The remedy for this situation is to tell the students that these cards are just like cash or your license. They must treat the cards as if they are cash. If they lose them, they will need to buy a new one from the Cash Card office.
References
Duke University, (2003-2005). Direct costs. Office of research support. Duke University.
Retrieved on May 19, 2008, from http://www.ors.duke.edu/ask/proposal/budget/direct/
Gido, J., & Clements, J., (2003). Project budgeting. Successful Project Management. Thomson.
Southwestern. (Ch. 9, pg. 256).
Wideman, R.M., (2002). Project risks. Wideman Comparative Glossary of Common Project
Management Terms. Retrieved on May 19, 2008, from http://maxwideman.com/pmglossary/PMG_P14.htm
Mark Ankuda graduated from his Associates of Arts in Business Administration with a 4.0 GPA. He is now attending an Advanced BSBA in Accounting. His goal is to teach business and accounting with a Master’s and Doctorate in Business.
