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Glossary

Project Calculation

Project Calculation - Glossary Entry

Summary: Project calculation is an important method for determining the costs and profitability of a project. It helps companies to plan and monitor the required resources, time spent, and financial aspects of a project. For successful project calculation, thorough planning, analysis, and control of costs are necessary. It depends on the selection of suitable calculation methods and tools to achieve the most accurate and realistic results.

Project Calculation in Detail

Project calculation is a central part of project management and refers to the systematic determination and monitoring of the anticipated costs of a project. It serves to assess the economic viability and profitability of a project and supports companies in the planning and control of projects. Project calculation includes various aspects such as estimating the required budget, determining resource requirements, planning the time expenditure, and controlling ongoing costs.

Phases of Project Calculation

Project calculation takes place in several phases, which are explained in more detail below:

1. Planning: In the planning phase, project goals are defined and the required resources, such as personnel, materials, and capacities, are determined. Additionally, a schedule for the execution of the project is created.

2. Analysis: In the analysis phase, the anticipated costs of the project are determined, and potential risks are identified. This includes estimating the effort and quantity structures as well as identifying cost drivers.

3. Control: Ongoing cost control is an important part of project calculation. This involves comparing actual costs with planned costs and analyzing deviations. If necessary, adjustments are made to the project planning.

4. Conclusion: At the end of the project calculation, the total costs of the project are determined and the profitability of the project is assessed.

Methods and Tools of Project Calculation

Various methods and tools are available for successful project calculation. These include, among others:

  • Cost Estimation: Cost estimation is used to determine the anticipated costs of a project. It can be based on various methods, such as expert estimation, analogy estimation, or parametric estimation.
  • Cost Accounting: Cost accounting is an essential tool of project calculation. It is used to record, allocate, and analyze the costs of a project and helps to assess the economic viability and profitability of the project.
  • Risk Analysis: Risk analysis helps to identify potential risks and uncertainties in project calculation and to develop suitable measures for risk minimization.
  • Budgeting: Budgeting is a central element of project calculation and involves setting the financial framework for a project. The available financial resources are distributed across the different project phases and activities.
  • Controlling: Controlling is an important part of project calculation and is used for ongoing monitoring and control of costs. Actual costs are compared with planned costs, and deviations are analyzed.

Important Metrics and Indicators of Project Calculation

Various metrics and indicators are relevant for assessing the economic viability and profitability of a project. These include:

  • Project Costs: Project costs include all costs associated with the execution of a project. They can be divided into different categories, such as personnel costs, material costs, or investment costs.
  • Contribution Margin: The contribution margin is the difference between the revenues earned and the variable costs of a project. It shows to what extent a project contributes to covering fixed costs and generating profits.
  • Profitability: Profitability is an important metric for assessing the economic viability of a project. It indicates how much profit is made in relation to the capital invested.
  • Break-even Analysis: The break-even analysis is used to determine the profit threshold of a project. It shows from which sales level the project operates at cost-covering and generates profits.
  • Net Present Value (NPV): The Net Present Value (NPV) is an indicator of the capital value of a project. It calculates the present value of all cash inflows and outflows associated with the project.

Conclusion

Project calculation is a central element of project management and an important tool for assessing the economic viability and profitability of a project. Therefore, companies should pay close attention to thorough project calculation when planning and executing projects in order to recognize potential risks and cost overruns at an early stage and to take appropriate measures. It is important to choose suitable methods and tools to achieve the most accurate and realistic results.