Question: answer part b only Cost overruns A. Three months into a lump sum project, this project manager has realized that his company is overrunning costs
answer part b only
Cost overruns A. Three months into a lump sum project, this project manager has realized that his company is overrunning costs on half of the direct work activities. They are under-running on the other half. The bottom line looks okay, maybe even on the plus side. Is this possible? Can he do anything about the codes that are overrunning? Since the bottom line looks okay, should he even worry about it? This project's superintendent does not want to report any single line item cost overruns to the home office, and asks the PM to forecast the original estimate in each case so that the variances zero out. How can the PM cover up this situation? What are the ramifications if he does what the superintendent is asking? As long as the project makes the original fee, does it really matter how individual cost codes turn out? B. This is a similar situation to the above, except all of the codes appear to be overrunning their estimates. The project looks like it is going in the tank to a tune of approximately $500,000. What are some of the reasons this overrun could be occurring? Should the project manager and the superintendent just hold on and ride it out? What are some potential resolutions you could recommend to the jobsite team? Should they ask for assistance from the home office? Should they start looking for a new employer
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