Framework: An Integrated Approach to Portfolio, Program and Project
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I. INTRODUCTION TO TOTAL COST MANAGEMENT - CHAPTER 1 - INTRODUCTION
1.4 Key Introductory Concepts for Total Cost Management
.1 Total Cost Management. The sum of the practices and processes that an enterprise uses to manage the total life cycle cost investment in its portfolio of strategic assets. Describes the process employed in the profession of cost engineering.
.2 Resource Management. (1) The effective planning, scheduling, execution, and control of all organizational resources to produce a good or a service that provides customer satisfaction and supports the organizations competitive edge and, ultimately, organizational goals. (2) An emerging field of study emphasizing the systems perspective, encompassing both the product and process life cycles, and focusing on the integration of organizational resources toward the effective realization of organizational goals. Resources include materials; maintenance, repair, and operating supplies; production and supporting equipment; facilities; direct and indirect employees; and capital.
.3 Project Management. The methodical application of management knowledge, skills, and practices to project activities in order to meet project objectives.
.4 Management Accounting. The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability of its resources.
.5 Costs and Resources. Any investment of time, money, human effort, or physical objects in the enterprise's products, services, and assets.
.6 Strategic Asset. Any unique physical or intellectual property of some scope that is of long term or ongoing value to the enterprise.
.7 Enterprise. Any endeavor, business, government entity, group, or individual that owns or controls strategic assets.
.8 Process. A flow of inputs and outputs with mechanisms that transform the inputs to outputs.
.9 Projects. A temporary endeavor to conceive, create, modify, or terminate a strategic asset.
.10 Operations. Ongoing endeavors that use strategic assets.
.11 Life Cycle. Describes the stages or phases that occur during the lifetime of an object or endeavor. A life cycle presumes a beginning and an end. The asset life cycle describes the stages of an assets existence, and the project life cycle describes the phases of a projects endeavors.
.12 Life Cycle; Asset. Describes the stages of asset existence from ideation through termination during the lifetime of an asset.
.13 Life Cycle; Project. Describes the stages of project progress from ideation through closure during the lifetime of the project.
Further Readings and Sources
The TCM process is a new concept and the Framework is the original defining text. However, the following are sources of general information about the practice areas that are involved in or associated with the TCM process.
Cost Engineering and Total Cost Management
AACE International, the Association for the Advancement of Cost Engineering, www.aacei.org
Cost Engineers Notebook (current revision)
Recommended Practices (current revisions)
Professional Practice Guides (current editions)
Skills and Knowledge of Cost Engineering, 5th ed. Editor Scott J. Amos, 2004.
Certification Study Guide, 3rd ed., 2005.
Management Accounting and ABC
Institute of Management Accounting (IMA), www.imanet.org
Cokins, Gary. Activity Based Cost Management: An Executive Guide. New York: John Wiley & Sons, 2001.
Player, Steve and David E. Keys. Activity-Based Management. New York: MasterMedia Limited, 1995.
Project Management Institute (PMI), www.pmi.org
A Guide to the Project Management Body of Knowledge (PMBOK® Guide), 3rd ed. Upper Darby, PA: PMI, 2004.
An Executives Guide to OPM3: A Guide to Strategic Success, Business Improvement and Competitive Advantage, Upper Darby, PA: PMI, 2004.
Resource Management and ERP
APICS, the Association for Operations Management, www.apics.org
Langenwalter, Gary A., Enterprise Resources Planning and Beyond. Boca Raton, FL: St. Lucie Press, 2000.
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