Abstract
Introduction
At the beginning of the third millennium not only does the success of organizations, industries and the economy of the state depend on what the enterprise is now, but it also takes into consideration what it will be in the nearest future. This condition pushes companies to innovate. At the XX century it was not so substantial. But now in the era of information technology innovations become a vital need of any enterprise regardless of its activities.
The implementation of the innovations is directly related to the project activity because of the specificity of this sphere. It allows carrying out effective estimation, development and implementation of the innovative projects.
Thus, the problem of effective and qualified management of innovative projects appears under these circumstances. Mainly, organizations are faced with the task of managing the costs of innovative projects.
The PMI specialists R.Archibald, M.Newell, R.Newman, I.Mazoor, V.Shapiro, and Ukrainian authors V.Khobta, O.Popova, S.Kravchenko in their scientific publications and literature pay a great attention to the process of managing the costs of the projects.
Managing the costs of the innovative projects is a new enough subject for researches. It is because the problem of innovative development of the economy of Ukraine appeared just recently. In its turn, this fact needs a thorough investigation of the methods of managing the projects during the implementation of the innovative projects.
The purpose and objectives of the study
The purpose of the master’s paper: extension of the theoretical statements and development of the practical recommendations for managing the costs of innovative projects.
It is necessary to solve following problems in order to achieve the aim above:
- to analyze existing standards of managing the costs of the projects;
- to develop the method of implementation the project taking into account managing its costs;
- justify the best methods of managing the costs of the innovative projects.
The object of the investigation – the process of managing the costs of innovative projects.
The project of the investigation – models, methods and principles of the managing the costs of innovative projects.
The methods of the investigation.
The dialectic method of learning the economic processes in their dynamics and correlation is the basis of the investigation. Next methods are used at the master’s paper:
- the systematic approach, that reveals the correlation between the elements, components of the price of innovative project and allows the investigation of the internal structurally functional, cause and effect, hierarchical, direct and reverse links;
- general scientific methods of the analysis and synthesis, grouping and comparison, and also the abstract-logic method are used while studying the theory and practice of managing the innovative projects;
- methods of graphic and dynamic rows, summary and grouping, the selective, index and correlation analysis were used for the for an estimation of influence of various factors on cost of the innovation project.
The main statements of the master’s paper
The urgency of the master’s paper, aim, tasks and objects are stated in the introduction. It also reveals the scientific novelty, practical and theoretical meanings of the recommendations made in the paper.
The first chapter “Theoretical basis of the managing the costs of innovative projects” defines the essence and the role of the managing the costs of the project, managing the innovative processes; the essence and different kinds of the project’s cost; clarifies the principles of the managing and analyzes the mechanisms of managing the costs of the projects.
Managing the costs of the project in a common understanding is a complex of methods, strategies and principles needed to guarantee the fact that the project will be fulfilled according to the financial limits.
Managing the costs of the projects includes:
- planning the resources. That is planning the number and the amount of the resources needed to finish the project;
- estimating the costs. It means the estimation of the costs of the each resource (wages of the specialists, material costs, equipment), needed to carry out the project;
- budget planning, that includes the distribution of expected expenditure for the definite parts of the project;
- monitoring the expenses, which is managing the changes of the budget.
Managing the costs of the project is connected with one of three basic restrictions in projects. That is costs, terms and requirements to the subject. Observance of all these restrictions allows finishing the project within time and budgeting limits with the satisfaction of the expectations of the customer (it means fulfilling all the objectives stated at the very beginning).
The main objective of management the costs of the project consists in finishing it within the voted budget limits.
The budget is the main document the whole project is managed with. Budget is the directive document representing the register of planned expenses and incomes with distribution under articles for the corresponding period of time. The budget is the document defining resource restrictions of the project. Therefore, the cost part, that is also called the project estimate, plays the main role while managing the costs [2].
The estimate represents a complex of calculations for definition of the amount of expenses for the project. At the same time the estimate is a tool of management which is used during the project realization. Therefore the estimate has a double value. First, it is the document defining cost of the project. Secondly, it is the tool for the control and the analysis of the expenses on the project.
The amount of the capital investments is defined on the basis of the estimate including expenses on:
- project works;
- acquisition of the equipment needed for the realization of the project;
- works on installation of this equipment;
- fulfilling the technical and architectural supervision;
- developing the project documentation, etc.
Correct defining of the budget of the project plays an important role. The estimation of profitability of the project, planning of capital investments and financing depends on how accurate the estimate reflects level of necessary expenses. The estimate will be as exact, as the complex of works and assumptions are defined.
Budget cost of project works is used for defining of contractual price and the discussing the contracts (agreements) between customers and contractors, between the general contractor and subcontractors, and also for calculations between them.
Indicators of budget cost are necessary for an estimation of the variants of project decisions on building and reconstruction of productive and non-productive objects and a choice of economically expedient of them. Besides, budget cost is used for comparison of variants of the organization of the project, manufacture of works, for a choosing of constructive and space-planning decisions, etc.
The budget of the project, accounting, reporting and estimation of activity of the customer and the contractor is carried out on the basis of the estimate and the schedule of the project. Therefore not only should budget cost cover the expenses, but it also should provide a certain profit. Comparison of budget cost of works and actual expenses is a basis for revealing of sources of profit and reasons of unprofitable work. But anyway the estimate gives only the forecast of final cost of the project as its finite will be known only after it will be implemented and the project financing will be finished.
The control over an expenditure of financial assets on the project is carried out in the following sequence:
- Amounts of executed works are defined;
- Budget cost of the executed works is evaluated;
- Budget cost of the executed works is compared with the budget cost of the planned works;
- The rests of budget cost are defined;
- Actual expenses for the performed works are defined;
- Actual expenses are compared with the budget cost of the executed works;
- The economy or the over-expenditure of financial assets is evaluated.
Constant comparison of actual results with the planned allows to estimate objectively the productivity of the implementation of the project and to establish the degree of correspondence to the initial plan [4].
The second section "Methodical aspects of planning the cost of the project" is devoted to an economic estimation of the manufacture and carrying put the innovative projects of the enterprises. In this context, on the basis of the enlisted analysis, the factors that influence the efficiency of the managing the projects are defined. Also the estimation of their influence is carried out.
Estimation of a real condition of the sphere of managing the projects has allowed drawing conclusions on the further ways of its development.
Various kinds and methods of estimation of cost of the project are used depending on a stage of life cycle of the project and the estimation purposes. Basing on the purposes of estimations, the accuracy of such estimations various can also be different [5].
Managing the cost is carried out throughout all the life cycle of the project. Thus, naturally, managerial processes are realized differently at various stages of a project’s cycle. It finds reflection in the modern concept of managing the cost of the project, which is managing the cost throughout life cycle of the project [4].
In general, techniques of drawing up the estimations of expenses are divided into two big categories: conceptual and deterministic.
Conceptual methods demand considerable efforts at data gathering and working out the methods before the estimation preparation. Analyzing the initial cost of assets it is extremely difficult to calculate exact coefficients and algorithms of the estimation to fulfill a conceptual estimation.
On the contrary, deterministic (or detailed) estimation demands the big efforts during its actual preparation. The estimation and the quantitative analysis of the project can take a lot of time. For very big projects sometimes it can take weeks and even months. Research and application of the exact and detailed information on the prices, and also carrying our the specific estimated updatings of quantitatively defined content of the project also will take a considerable time [6].
It is of high importance to take the influence of the schedule and duration of realization of the project into account while making an estimate. The schedule can directly influence productivity, and also the prices for work and materials in addition to the unconditional accounting of growth of expenses. It is extremely important at early stages of realization of the project to plan integration of an estimation of expenses/schedules so that results of an estimation could be used in the schedule for correct distribution of resources and possibility of an estimation of the received effect and making the reports while the realization of the project.
The estimation of expenses, certainly, is the major component of success of the project. Not only are estimations of expenses used for calculating the budgets of projects, but they are also used for giving the exact information for observance of the schedule, monitoring the expenses and controlling the process of realization of the project [7].
The third section is devoted to:
- working out the recommendations on the necessity of use of the defined methods of managing the cost of the project;
- describing the mechanisms that allow an effective managing the cost;
- stating offers on improvement the project activity while carrying out innovative projects.
Recommendations are planned at the third part of the master’s paper.
In the third section working out of recommendations about a substantiation of expediency of use of certain management methods in cost of projects is planned; the mechanisms allowing effectively will be described to operate cost; offers in directions of perfection of design activity will be formulated at performance of innovative projects.
Conclusions
This thesis reveals theoretical generalization and a new solution of a problem. It is shown in a scientifically-practical defining of ways of perfection of the process of managing the cost of innovative projects.
- The correlation between various aspects of management of projects is revealed.
- Basing on the analysis of the theory and practice of managing the projects the best methods of managing the cost of projects are defined.
- The condition of work of the enterprises of Ukraine has been investigated. Fulfilled analysis of the basic tendencies of development of innovative activity allows drawing a conclusion about its slowing down, despite economic situation improvement. The correlation analysis of the level of profitability of manufacture of the enterprises has allowed establishing its dependence on introduction of innovative projects.
Literature
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