Assignment task: Tracking Project Expenses
Project Managers often under-report project costs because they only consider the costs they are directly managing. Often when a project approaches completion other departments and suppliers assign costs to the project that they believe are legitimate project costs. Consider each of these scenarios. Determine how much of each of the identified costs should be assigned to the project.
1. You are managing a new product development project. During your project, the Quality organization had an inspector who was visiting a supplier take time to inspect the supplier's processes and the first pieces the supplier made for your new product. The Quality inspector was onsite to complete the annual quality audit required to be done on each production supplier. The inspector was at the supplier for two days, one day inspecting your new product processes and pieces and one day conducting the audit. Quality wants to charge half of the travel costs and inspector time to your project - is that appropriate?
2. You are managing a facility upgrade project. The upgrade involved: 1) carpentry work to move some walls, 2) changes to the wiring, 3) changes to the plumbing, 4) upgrade of the HVC system, 5) addition of a security system, 6) new carpeting, 7) new plumbing fixtures in toilet rooms, 8) carpentry work to add trim around doors and windows, 9) new paint on the walls, trim, and ceilings, and 10) the purchase and installation of new furniture. Almost all of= the work was done by sub-contractors. The sub-contractors have been submitting monthly invoices for the work they accomplished during the month. During the course of the project, the plumbers requested a change in the location of some of the pipes in order to reduce the number of fittings and reduce costs by $800. You approved the change and the plumbing bill was $800 less. As the project is finishing up, the HVAC contractors come back to do the final installation of the climate control system and at that time submit an invoice for $5700 more than originally planned due to work they had to do rerouting ductwork because the change in the location of the plumbing lines interfered with where the blueprints for the HVAC system. You checked their invoice and the amount billed accurately reflects the extra amount of design work, materials, and installation that they did. Should you recognize those costs and pay the bill?
3. You are managing an IT project. As part of this project, you set up several servers for testing.
Fortunately, there were three unused servers from a project that was cancelled earlier this year. You set up the servers and use them for testing. When your project finishes, you pass those servers on to another project that wants to use them for their test environment.
Finance contacts you and tells you that the cost of acquiring the three servers is being transferred from the cancelled project to your project since you used them on your project.
Should your project be charged for those servers? Should they be charged to the first project that bought them? Should they be charged to the third project that is now using them?