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Cost changes and the Implementation of Control Mechanisms Report (Assessment)


Introduction

In one form or another problems often occur in projects whether they come in the form of delays, cost changes, timeline adjustments or a variety of other problems that create scheduling and planning problems during a project (Lenfle and Loch, 32 – 55). In order to resolve such incidents, it is often necessary to have a control change mechanism in place to make sure that alternative plans exist for particular processes to continue to function normally.

Cost changes and the Implementation of Control Mechanisms

Ingredients and Menu Pricing

One of the main problems in the restaurant business are sudden cost changes to ingredients brought about by nature calamities such as floods, earthquakes, red tide etc. This directly impacts the restaurant’s bottom-line since if the dished served costs more to make than its indicated price on the menu then the restaurant would of course lose money as a direct result.

Taking this into consideration, the contracts between the restaurant and suppliers must be amended in order to have some form of provision indicating that the restaurant will only buy a certain number of ingredients based on a previously agreed upon set price.

This ensures that should there be a sudden change in the price of ingredients the restaurant will not be contractually liable to purchase them at a loss (Lenfle and Loch, 32 – 55). It must also be noted that there a certain degree of control must be implemented on the menu prices themselves.

Aside from the external circumstance that may increase the price of ingredient the restaurant also needs to take into consideration subsequent increases in employee salaries as a direct result of cost of living increases not to mention the fact that there are also issues related to rent, utilities expenses and miscellaneous other expenses that may occur that necessitate price increases on the menu.

As such, cost control mechanisms must be implemented in regards to these potential problems in regards to an adjustable profit/loss scale in order for the restaurant to determine what point would it be necessary to implement changes in pricing (Lenfle and Loch, 32 – 55).

Timeline Adjustments

Between the planning and actual performance stage comes the implementation stage where all the initial plans for the restaurant are implemented and tested in order to ensure that everything is working as it should be.

During this particular stage though, you must take into consideration that not everything will go as planned and as such it is necessary to implement sufficient timeline adjustments that take into consideration delays in construction, equipment arrival, training of staff, creation of sufficient supply contracts and a variety of other potential delays that may occur (Blackstone, Cox, and Schleier, 7029-7046).

What you have to understand is that control mechanisms in the form of rescheduling strategies, a work around plan and a variety of other processes are needed in order for operations to continue unimpeded (Blackstone, Cox, and Schleier, 7029-7046).

The creation of a restaurant comes in particular stages with one aspect leading to another, if delays occur and the owner still attempts to push on through with the original schedule, the possibility of grave problems (i.e. faulty wiring, food being delivered too early, untrained staff etc.) increases exponentially.

As such, it is necessary to implement some form of alternative plan when certain delays occur in order for certain processes to still go ahead as planned without necessarily causing interruptions with other aspects of the processes needed to finish the restaurant.

Project Performance

When it comes to the overall performance of the project, certain control mechanisms need to be implemented in order to ensure that everything is going according to plan and is not over budget.

This involves control mechanisms which examine the daily costs associated with construction, the amount of progress made in finishing the restaurant and determining whether the speed in which the construction is being done is in line with the original budget for the construction of the restaurant.

Furthermore, it must be determined whether the training of employees for the restaurant as well as the development of the necessary preparations for promotion are also on schedule (Krane et al., 54 – 67). Neglecting to examine such factors and implement some measures of control to them can lead to a disastrous opening

Introducing Project Contracts and Agreements

In regards to properly implementing the necessary project contracts and agreements, these activities will be instituted through the various development plans of the restaurant via a consensus of the project team.

New iterations to the contracts will be discussed and deliberated until all parties involved are satisfied with the changes. Once all parties are in agreement the agreements and contracts will then be subsequently finalized and implemented into the main project development plan.

Informing the Project Team of Changes to the Plan

Should subsequent changes to the project plan be necessary the project team in conjunction with personnel who are directly impacted by the changes will be called to the restaurant site (or the nearest possible convenient location) in order to discuss the subsequent changes needed.

Should various individuals be otherwise indisposed due to a combination of events the details of the meeting will be forwarded to them via a transcript report and their role in the changes will be indicated.

Potential Impact on Budgets, Schedules and Deliverables

Once the project has been proved and is underway it is expected that there will be changes in budgetary allotments and schedules will definitely be delayed. What you have to understand is that there is a world of difference between planning something on paper and actually seeing things through.

Sudden changes as a direct result of external circumstance often occur, as a result costs often spiral upwards with the original budget intended for the implementation stage of a restaurant project often reaching 15 to 20 percent over budget. Such is the nature of implementation procedures that more often than not project managers often allocate a certain amount from the intended capital when starting a particular business in order to deal with costs related to going over budget.

It must also be noted that developing a scheduling plan for construction, installation, training and a variety of other necessary processes all hinges on the fact that everything is completed by the allotted time given for a particular activity. Unfortunately this is often not the case and as such control mechanisms in the form of alternate schedules must be devised in order to deal with such problems.

Deliverables on the other hand will definitely be affected with the potential for certain outcomes being delayed or not happening at all as a direct result of certain changes to the overall planning of certain aspects of the projects. In cases such as this it is best to adjust the expectations of what deliverables may occur based on the new data from the project planning stage.

Works Cited

Blackstone, John H., James F. Cox, and John G. Schleier. “A Tutorial On Project Management From A Theory Of Constraints Perspective.” International Journal Of Production Research 47.24 (2009): 7029-7046. Business Source Premier. Web.

Krane, Hans Petter, Nils O. E. Olsson, and Asbjôrn Rolstadås. “How Project Manager- Project Owner Interaction Can Work Within And Influence Project Risk Management.” Project Management Journal 43.2 (2012): 54-67. Business Source Premier. Web.

Lenfle, Sylvain, and Christoph Loch. “Lost Roots: How project management came to emphasize control over flexibility and novelty.” California Management Review 53.1 (2010): 32-55. Business Source Premier. Web.

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IvyPanda. "Cost changes and the Implementation of Control Mechanisms." April 15, 2019. https://ivypanda.com/essays/cost-changes-and-the-implementation-of-control-mechanisms/.

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IvyPanda. 2019. "Cost changes and the Implementation of Control Mechanisms." April 15, 2019. https://ivypanda.com/essays/cost-changes-and-the-implementation-of-control-mechanisms/.

References

IvyPanda. (2019) 'Cost changes and the Implementation of Control Mechanisms'. 15 April.

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