Final Essay Exam Example | Topics and Well Written Essays - 750 words

Final Exam - Essay Example A clear path on which to formulate or base project costs is almost non- existent. For instance, each software project is distinct it might be mobile app for a specific institution like a University, bank, or government institution. The initial project cost might be underestimated due to the initial inadequacy of details. The cost quickly increases at the instance of an arising complication. For instance, in installing the hardware might be incompatible with the software. Alternatively, the scope might expand to unexpected dimensions. In addition, IT projects often entail the integration of new technologies. There are high risks associated with the use of new technologies in projects. The complex problems that arise during the project might lead to increased prices or closure of the project. New technology can swiftly derail the budget project to unexpectedly high volumes (Bittner and Gregorc 45). For instance, software is often developed independent of the operating system. Consequently, if the software developed is not compatible with the operating system then, it must be adjusted. This usually results in many and unexpected costs. Thus, more often than not, the cost management of an IT project is not accurately done by the IT professionals. Furthermore, IT professionals lack a business background. Therefore, they do not understand the significance of basic finance and accounting principles. They do not understand concepts such as value analysis, sunk costs, profits, learning curve theory, and return on investm ent or pay back analysis (Bittner and Gregorc 45). The inability to grasp these concepts often leads to cost overruns or abandonment of the project. Earned value management is an analysis technique applied in monitoring a projects status and progress. It is a highly valuable tool in forecasting the probable future performance of the project. Earned value management utilizes cost, schedule, and scope in the analysis