Cost and Value Management in Projects, 2nd Edition

Chapter 1Introduction to the Challenge of Cost and Value Management in Projects

Learning Objectives

After studying this chapter, you should be able to:

• Explain the challenges of cost and value management in projects.
• Describe the importance of cost and value management in projects.
• Identify the key elements of effective project cost management.
• Describe the essential features of effective value management in projects.

The past 40 years have witnessed a dramatic increase in the number and variety of organizations engaged in project-based work. In addition to “traditional” project-oriented industries, like construction, aerospace, and pharmaceuticals, service industries as diverse as finance, utilities, telecommunications, and insurance have embraced project-based ventures.

This paradigm shift is due to growing recognition that projects and their effective management can provide organizations with a significant competitive edge through cost reduction, enhanced responsiveness, and overall value to customers. Consequently, a number of organizations have adopted many of the well-known techniques of project management, and professional project management organizations have witnessed marked increases in membership.

Despite this enormous interest in projects and project management practices, success rates in many industries are at alarmingly low levels. In addition, bad news about high-profile projects continues to dominate the headlines—in both the public and private sectors. Consider ...