Journal 6:
Money is used in almost everything we do. It becomes the root cause of our
decision-making which is also why it affects our daily lives. In Hospitality Facilities, the
cost is considered the project's lifeblood. The overall project relies on it. Hence, it is one
of the most important developmental elements to focus on. It is a developing and
progressive resource that needs to be updated frequently throughout the development
process. It necessitates good budgeting since cost control can prevent waste and
guarantees that all resources are used to their full potential. By clearly identifying the
materials and services needed in the total project development or running efficiently,
staying within the budget, and avoiding overspending on certain things, one can manage
them cost-effectively. Having enough knowledge and being able to manage costs can
give you the main benefit of lowering your business's overall expenses. The primary goal
is to optimize revenues and ROI, and in order to achieve so, controlling expenses such
as building shells, building utilities, building finishes, furnishings, fixtures, and equipment
is critical. The development budget will be controlled appropriately if the cost is done
correctly and paid attention to every aspect. Failure to do so will result in our organization
incurring losses.
Cost is a vital developmental element that is considered the development project's
bloodline. In the video entitled "How to Estimate Project Costs: A Method for Cost
Estimation," the best way to estimate cost was discussed. Cost estimation is important
because accurately estimating project costs is extremely difficult, and poor cost estimates
are frequently the primary cause of project budget overruns. The 'knife-edge' was
mentioned in the video, aiming to cut costs, satisfy the funder, and increase the budget
to lower a project's risk. In other words, it aims to maximize contingency and minimize
cost. The topic is divided into five parts. The first one is the cost estimation process,
followed by the discussion about the sources of costs in project management, next is the
estimating methods and cost estimation tips, then it was discussed how to add a
contingency to your project costs, and lastly, from estimates to budget to cash flow. There
are also estimating techniques that were mentioned, such as the first one which is the
order of magnitude, the second, past projects - "reference class," the third is the
parametric - rule of thumb, the fourth is binds, tenders, contracts, the fifth is the catalog
and pricing schedule, sixth is the samples, pilots, prototypes, and lastly, the red team
review. After completing these things, one would be able to manage and estimate costeffectively. Moreover, contingency is necessary for any project in estimating costing. After
getting contingency and estimates can now proceed to cash flow—dividing the cost and
revenue. Overall, cost estimating is uncertain and difficult but has a lot of approaches and
ways to make a reliable estimate of any form of project.
Assignment 6: