Managing Cost Variance in MEI Medical Centers Term Paper by scribbler

Managing Cost Variance in MEI Medical Centers
A brief discussion on how MEI Medical Centers can utilize a cost variance strategy.
# 152846 | 961 words | 3 sources | APA | 2013 | US
Published on Apr 30, 2013 in Business (Finance, Investment and Banking) , Business (Management)


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Description:

The paper explains that the cost variance is the difference between the expected or budgeted cost and the actual cost. This paper examines the issue of cost variance with respect to MEI Medical Centers' MRI machine purchase by looking at potential areas of cost variance and the use of benchmarking techniques to control costs. The paper compares the five costs for the MRI project and shows how the company can manage this cost variance risk.

Outline:
Introduction
Potential Areas of Cost Variance
Benchmarking
Comparison of Results

From the Paper:

"There are a number of potential areas of cost variance. The single biggest cost is the MRI machine itself. This is an easy cost to control for the most part, since there are a variety of different machines on the market, and there is probably a secondary market for used machines as well. However, the purchase is concerned with a new machine, a 1.5 tesla scanner that is expected to cost between $1.0 and $2.0 million. The first technique for managing the potential variance of this purchase is to set the budget at a realistic point. The low end figure derives from a source a few years old - the information may not be entirely up-to-date. More recent estimates place the cost at the upper end of the range.
"The time frame is also an important consideration. This purchase is at present an optional purchase rather than a mandatory one. Thus, the company has some degree of flexibility with respect to the timing of the purchase, and this can allow it time to source or negotiate the best possible price. Using the high-end estimate of $2 million also gives the company greater understanding of the NPV of the project - if it still has a high NPV at the high end purchase price, this more conservative estimate of the project's value should be taken as a good sign."

Sample of Sources Used:

  • Veronka, A.; Riantini, L. & Trigunarsyah, B. (2006). Corrective action recommendations for project cost variance in construction material management. The 10th East Asia-Pacific Conference on Structural Engineering and Construction. Bangkok, August 2006.
  • Ghosh, A. (2010). Project cost estimation. ASP Alliance. Retrieved October 1, 2010 from http://aspalliance.com/articleViewer.aspx?aId=1155&pId=-1
  • NRC. (1997). Measuring performance and benchmarking project management at the Department of Energy. National Research Council. Retrieved October 1, 2010 from http://www.nap.edu/openbook.php?record_id=11344&page=7

Cite this Term Paper:

APA Format

Managing Cost Variance in MEI Medical Centers (2013, April 30) Retrieved June 03, 2020, from https://www.academon.com/term-paper/managing-cost-variance-in-mei-medical-centers-152846/

MLA Format

"Managing Cost Variance in MEI Medical Centers" 30 April 2013. Web. 03 June. 2020. <https://www.academon.com/term-paper/managing-cost-variance-in-mei-medical-centers-152846/>

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