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Product Life-Cycle Costing Leads to the Best Decisions
September 14, 2008 | Author: PM Hut | Filed under: PMP, Project Management Best Practices
Product Life-Cycle Costing Leads to the Best Decisions (#5 in the series PMP Exam Themes – The Perspective You Need To Develop To Be Prepared)
By Brian Denis Egan, B.Sc, M.Sc., M.B.A., PMP - Global Knowledge Course Director
Pretend you are the PM of a product development project and have to make a decision about safety testing. You can save time and money on the project by avoiding child safety testing. The product is specifically for adults and technically does not need to be tested for children. Child safety testing has the advantage of making the company appear to be child friendly and will reduce liability in the event of an injury involving children.
What should you do? Life-cycle costing looks at the decision in terms of the long-term interests of the organization. This may be in conflict with the short term interests of the project.
It might be cheaper and easier to avoid child safety testing for now. The project would be finished sooner. But how would taking such a narrow view of the issues affect the long-term interests of the organization?
To make the best decision you should first consider and determine the implications of not testing, such as increased liability, and balance this against the short-term savings. Prudent PMs thinks long term and looks at the big picture. All PMs are expected to do the right thing for a project, but not at the expense of the enterprise.
About the Author
Brian Denis Egan is CEO of a manufacturing company (Book Box Company) and a management consultant. He has written three professional development manuals and numerous white papers on aspects of management science. Since 2000, Brian has been a part-time instructor for Global Knowledge within the Management product line.
This article was originally published in Global Knowledge’s Business Brief e-newsletter. Global Knowledge delivers comprehensive hands-on project management, business process, and professional skills training. Visit our online Knowledge Center at www.globalknowledge.com/business for free white papers, webinars, and more.
© Copyright 2008, Global Knowledge. All rights reserved.
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