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It frees up time taken by existing staff on the contracted-out activities.
It allows the company to take advantage of specialist expertise and equipment
rather than investing in these facilities itself and underutilising them.
It frees up time spent supporting the contracted-out services by staff not directly
involved, for example supervisory staff, personnel staff.
It may be cheaper once time savings and opportunity costs are taken into
account. √
It is particularly appropriate when an organisation is attempting to expand in
time of uncertainty because it allows the use of facilities on a short-term
(readily-cancelled) basis which would only be otherwise available via relatively
long investments of a permanent employee and the training he or she.
Circumstances appropriate for partnering
If significant input is required from specialist contractors or subcontractors.
If there is a rapid expansion of a program of construction.
If time is a critical factor.
If projects are repetitive and based upon a set standard designs.
If there is a particular construction problem which is best solved by a team of
experts
QUESTION
Briefly explain steps that you would take to implement value analysis
Steps to implement value analysis
Step1. Select a product or service for study.
The product selected should be one which accounts for a high proportion of the
organisation’s costs, since the greatest cost savings should be obtainable from
high cost areas.
Step 2. Obtain and record information
The questions to be asked include: what is the product or service supposed to
do? Does it succeed? Are there alternative ways of making or providing it?
Step 3. Analysing the information and evaluate the service each aspect of the
product or service should now be analysed. Any cost reductions must be
achieved without the loss of use or esteem value.
Step 4. Consider alternatives from the analysis, a variety of options can be
devised. This is the ‘new ideas stage of the study, an alternative option would
mix ideas for eliminating unnecessary part or features or standardising certain
components or features.
Step 5. Selection of the least cost alternative the costs (and other aspects of value)
of each alternative should be compared.
PREPARED BY : MUNYA
, MAC 3703
Step 6. Recommendation the preferred alternative should then be recommended
to the decision makers for approval.
Step 7. Implementation and follow-up once value analysis proposal is approved
and accepted, its implementation must be properly planned and co-ordinated.
QUESTION
Briefly explain the possible benefits and drawbacks of backflush accounting.
Benefits
This costing system would discourage managers from producing unnecessarily
output for mere inventory piling since work-in-process does not add value until
the finished product is completed or sold
In Backflush costing, the number of accounting entries required would
significantly be reduced. Likewise, the supporting vouchers, documents and
other things would also be reduced.
Backflush costing is much simpler than any other methods since there is no
separate accounting for work-in-process.
Lower inventory results lower payment of financial cost of inventories.
Maintenance issues relating to material inventory relief huge workforce to work
on productive activities, thus saves money.
Drawbacks of backflush accounting
Only in few cases this system can be applied only in few circumstances where
the production process is very short and the inventory level is negligible.
Management not in a position to control
This system creates no information for the management to monitor the
performance and control the activities. So you can say that this system runs
automatically and stop automatically and there is no interference is involved
from outside
Backflush is unsuitable when manufacturing process is lengthy in nature. Again,
it may also be unsuitable when the bill of materials contains not only piece
commodities but also many parts with more or less variable use.
QUESTION
Recommend strategies that the project manager could use to manage the different
stakeholders’ expectations should conflict arise
Should conflicts arise between stakeholders, this may be resolved by:
PREPARED BY : MUNYA
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