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General Ship Company: Cost Monitoring & Control

Managing the Business Project Textbook: Project Management: A Managerial Approach by Wiley (6th ed)

Chapter 7: Budgeting and Cost Estimation

General Ship Company

General Ship Company has been building nuclear destroyers for the Navy for the last 20 years. It has recently completed the design of a new class of nuclear destroyer and will be preparing a detailed budget to be followed during construction of the first destroyer.
The total budget for this first destroyer is $90 million. The controller feels the initial project cost estimate prepared by the planning department was too low because the waste and spoilage allowance was underestimated. Thus, she is concerned that there may be a large cost overrun on the project and wants to work closely with the project manager to control the costs.

Question: How would you monitor the costs of this project?

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The response address the queries posted in 813 words with references.

//Before writing about the budget and estimation for a Company, we will discuss about the essential tools that are required to be considered by the Project Managers. Then, we will write about the 'Cost Monitoring' by the General Ship Company, which is involved in building nuclear destroyers for Navy.//

General Ship Company: Cost Monitoring & Control

In the construction process, project control procedures and the record keeping are the essential tools for the managers and the other participants for the execution of the project. These tools serve the dual purpose. Firstly, they record the financial transactions that occur during the project and secondly, they provide information to managers regarding the progress and problems associated with the project. To provide a fair indication of the existence and the extent of problems associated with the project is an important task of project control systems.

In every phase of constructing nuclear destroyer, cost control is considered to be as an essential element and also the most rigorous in the execution phase of the project as it is the phase where the money is spent. A controlled budget, which should be consistent with the way of spending money, is established for the effective cost control. It is more than just collecting ...

Solution Summary

The response address the queries posted in 813 words with references.