Difference between revisions of "How to Show Cost Data in Presentations"

From EG1004 Lab Manual
Jump to: navigation, search
m
Line 9: Line 9:


<p>In these presentations, managers are looking for two major items. First,
<p>In these presentations, managers are looking for two major items. First,
they’re looking at the data itself to see if it’s within the parameters
they're looking at the data itself to see if it's within the parameters
established for the project. Second, and possibly more importantly, they’re
established for the project. Second, and possibly more importantly, they're
looking to see if the presenter has firm control over the project cost data, and
looking to see if the presenter has firm control over the project cost data, and
is well aware of how the project is doing financially. If they are not confident
is well aware of how the project is doing financially. If they are not confident
Line 18: Line 18:


<p>Managers are usually not interested in the details of cost data, but want to
<p>Managers are usually not interested in the details of cost data, but want to
be able to see how overall costs are derived. They’re happy when they see the
be able to see how overall costs are derived. They're happy when they see the
clear “chain of evidence�? in a presentation, especially when the numbers are
clear "chain of evidence" in a presentation, especially when the numbers are
good. If the numbers are not good, i.e. costs are increasing or beyond the point
good. If the numbers are not good, i.e. costs are increasing or beyond the point
where we can make a profit, managers may still be willing to give a project
where we can make a profit, managers may still be willing to give a project
person a chance to correct the situation if they think the presenter is in
person a chance to correct the situation if they think the presenter is in
overall control of the situation and understands the costs. If they have no
overall control of the situation and understands the costs. If they have no
confidence in the presenter, even if the numbers they show are good, they’ll
confidence in the presenter, even if the numbers they show are good, they'll
have no confidence that the numbers are actually correct. Worse, if the numbers
have no confidence that the numbers are actually correct. Worse, if the numbers
are not good, they’ll get the feeling that the situation is out of control,
are not good, they'll get the feeling that the situation is out of control,
something that usually does not lead to significant career growth.</p>
something that usually does not lead to significant career growth.</p>


Line 43: Line 43:
<p>The overall format of cost presentation is very easy. The format consists of
<p>The overall format of cost presentation is very easy. The format consists of
four columns. The first column is the item being reported, sometimes with the
four columns. The first column is the item being reported, sometimes with the
“unit of measure�? shown as well, usually in parentheses. The unit of measure is
"unit of measure" shown as well, usually in parentheses. The unit of measure is
how the item is priced. For example, if you’re showing the price of a gallon of
how the item is priced. For example, if you're showing the price of a gallon of
gasoline, the unit of measure would be a gallon. However, if you’re showing the
gasoline, the unit of measure would be a gallon. However, if you're showing the
price of a dozen eggs, in most circumstances the unit of measure would be a
price of a dozen eggs, in most circumstances the unit of measure would be a
dozen (the usual way eggs are sold). For many tables, the only unit of measure
dozen (the usual way eggs are sold). For many tables, the only unit of measure
Line 56: Line 56:
is the cost for each unit of measure. For example, if gasoline is $2.69 per
is the cost for each unit of measure. For example, if gasoline is $2.69 per
gallon, the price shown would be $2.69. The next column is the number of units.
gallon, the price shown would be $2.69. The next column is the number of units.
Finally, the last column is the “extension�?, which is nothing more than the cost
Finally, the last column is the "extension", which is nothing more than the cost
per unit multiplied by the number of units. Each column also has a header showing
per unit multiplied by the number of units. Each column also has a header showing
what the column contains.</p>
what the column contains.</p>
Line 124: Line 124:


<p>For the bottom row, if possible do not show the empty cells; just show the
<p>For the bottom row, if possible do not show the empty cells; just show the
“Grand Total�? caption and the overall total for the project.</p>
"Grand Total" caption and the overall total for the project.</p>


<h2>Additional Issues</h2>
<h2>Additional Issues</h2>
Line 143: Line 143:
an example, the RCX block, motors, and sensors typically have a major impact on
an example, the RCX block, motors, and sensors typically have a major impact on
the overall project cost. On the other hand, things like bricks do not.
the overall project cost. On the other hand, things like bricks do not.
Therefore, what we’ll do is continue to show the high cost items on a line of
Therefore, what we'll do is continue to show the high cost items on a line of
their own, but lump the low cost items together.</p>
their own, but lump the low cost items together.</p>


<p>There are several ways we can lump the low cost items. The first way is to
<p>There are several ways we can lump the low cost items. The first way is to
lump them by type. For example, we might have a single line of “Bricks�? and the
lump them by type. For example, we might have a single line of "Bricks" and the
total cost for all the bricks In this case we won’t show a unit cost or quantity
total cost for all the bricks In this case we won't show a unit cost or quantity
since the overall total will be the sum of a number of all the different kinds
since the overall total will be the sum of a number of all the different kinds
of bricks. Another way to group the items would be by major component of the
of bricks. Another way to group the items would be by major component of the
project. For example, we might have a single item of “Gear Train�? which consists
project. For example, we might have a single item of "Gear Train" which consists
of all the gears and axles that are involved, and their overall cost. Usually
of all the gears and axles that are involved, and their overall cost. Usually
the type of project will guide you on which format to use In any case, with
the type of project will guide you on which format to use In any case, with
Line 158: Line 158:
management wants to see them.</p>
management wants to see them.</p>


<p>Another issue is the “unit of measure�?. In most circumstances, the default
<p>Another issue is the "unit of measure". In most circumstances, the default
unit of measure will be “each�?, so it’s not shown. Any different unit of measure
unit of measure will be "each", so it's not shown. Any different unit of measure
(e.g. “pair�? for socks, “dozen�? for eggs) etc. would be shown in parentheses
(e.g. "pair" for socks, "dozen" for eggs) etc. would be shown in parentheses
behind the item. Some companies like to show the unit of measure separately from
behind the item. Some companies like to show the unit of measure separately from
the item. In this case the item will be in the first column and the unit of
the item. In this case the item will be in the first column and the unit of
measure will be in the second column. The unit of measure for each line is
measure will be in the second column. The unit of measure for each line is
usually shown, even when it’s clear wheat the unit of measure is (i.e.
usually shown, even when it's clear wheat the unit of measure is (i.e.
“each�?).</p>
"each").</p>


<h2>Summary</h2>
<h2>Summary</h2>

Revision as of 03:10, 23 January 2009

How to Show Cost Data in Presentations

Introduction

In industry, managers are responsible for many projects. They are well aware that most projects do not fail for technical performance reasons, but usually fail because of problems with costs or schedule. Because of this, they pay extremely close attention to cost data given in presentations.

In these presentations, managers are looking for two major items. First, they're looking at the data itself to see if it's within the parameters established for the project. Second, and possibly more importantly, they're looking to see if the presenter has firm control over the project cost data, and is well aware of how the project is doing financially. If they are not confident on the second issue, they will not trust the cost data being shown to support the first issue. Therefore, it is critical that you be able to present cost data effectively, and give the impression of confidence.

Managers are usually not interested in the details of cost data, but want to be able to see how overall costs are derived. They're happy when they see the clear "chain of evidence" in a presentation, especially when the numbers are good. If the numbers are not good, i.e. costs are increasing or beyond the point where we can make a profit, managers may still be willing to give a project person a chance to correct the situation if they think the presenter is in overall control of the situation and understands the costs. If they have no confidence in the presenter, even if the numbers they show are good, they'll have no confidence that the numbers are actually correct. Worse, if the numbers are not good, they'll get the feeling that the situation is out of control, something that usually does not lead to significant career growth.

This page will act as an introduction on how to present cost data well, and therefore be able to gain confidence.

Overall Format

First of all, cost data is so important that it should have its own slide. It may be tempting to save time by including cost data as part of the materials list or in another part of the presentation. You should not do this. It makes it difficult for your teacher to understand the data, especially when various quantities of material are used. It is also not done this way in industry. Make sure this data gets the respect it deserves by giving it its own slide.

The overall format of cost presentation is very easy. The format consists of four columns. The first column is the item being reported, sometimes with the "unit of measure" shown as well, usually in parentheses. The unit of measure is how the item is priced. For example, if you're showing the price of a gallon of gasoline, the unit of measure would be a gallon. However, if you're showing the price of a dozen eggs, in most circumstances the unit of measure would be a dozen (the usual way eggs are sold). For many tables, the only unit of measure is "each". However, for some tables several different units of measure are used. For example, some items might be priced by the set, by the dozen, by length (feet or meters), or by area (square feet). When several different units of measure are used, you should add a separate column showing the unit of measure in order to make the table easier to read. If this column is present, it usually has a header of "U/M" (the abbreviation of Unit of Measure) to save space. The next column is the cost for each unit of measure. For example, if gasoline is $2.69 per gallon, the price shown would be $2.69. The next column is the number of units. Finally, the last column is the "extension", which is nothing more than the cost per unit multiplied by the number of units. Each column also has a header showing what the column contains.

Finally, the total cost for the project is shown in the bottom right corner of the table, and is the sum of the extensions. Figure 1 shows a typical table of costs that would be shown for a project. Note that in this case, only one item has a unit of measure other than "each", so we can just show it in parentheses next to the item.

ItemUnit CostQuantity Total
Fuselage$10000.001 $10000.00
Wings$5000.001 $5000.00
Tail$1000.002 $2000.00
Elevators$5002 $1000.00
Labor (hours)$50.00100 $5000.00
Grand Total$23000.00

Figure 1: A typical Cost Table

Figure 2 shows a more complex cost table where several different units of measure are used:

ItemUnit CostU/MQuantity Total
Fuselage$10000.00Each1 $10000.00
Wings$5000.00Pair1 $5000.00
Fabric$20.00Sq.Ft.100 $2000.00
Cable$5.00Foot200 $1000.00
Labor$50.00Hour100 $5000.00
Grand Total$23000.00

Figure 2: A Cost Table with several units of measure

Note that numbers are always right adjusted and test is always left adjusted. There may occasionally be exceptions to this rule, but it is a good starting point. Also, notice how the column headers are made different in some way to indicate that they are not data themselves. This is typically done by making the column headers bold test.

For the bottom row, if possible do not show the empty cells; just show the "Grand Total" caption and the overall total for the project.

Additional Issues

This project is very small, and therefore all the data easily fits on a single slide. For larger projects this will not be possible. Although managers may be interested in the detailed data, it is still a good idea to present the overall project costs on a single slide. This means that we might have to summarize individual items into groups to show the overall situation.

In this case, when we look at the detailed sheet, we usually see several items which have large costs associated with them. Even a small change in cost on these items can have a major impact on the overall costs of the project. Then, there are a number of minor items, typically involving large quantities, which do not contribute significantly to the overall cost. Frequently, these items are commodities, and therefore do not have significant price fluctuations. In this case, we can group these kinds of items together. Using RoboLAB parts as an example, the RCX block, motors, and sensors typically have a major impact on the overall project cost. On the other hand, things like bricks do not. Therefore, what we'll do is continue to show the high cost items on a line of their own, but lump the low cost items together.

There are several ways we can lump the low cost items. The first way is to lump them by type. For example, we might have a single line of "Bricks" and the total cost for all the bricks In this case we won't show a unit cost or quantity since the overall total will be the sum of a number of all the different kinds of bricks. Another way to group the items would be by major component of the project. For example, we might have a single item of "Gear Train" which consists of all the gears and axles that are involved, and their overall cost. Usually the type of project will guide you on which format to use In any case, with enough summarizing, you should be able to get the overall project cost onto a single slide. However, you should be ready to present the detailed costs if the management wants to see them.

Another issue is the "unit of measure". In most circumstances, the default unit of measure will be "each", so it's not shown. Any different unit of measure (e.g. "pair" for socks, "dozen" for eggs) etc. would be shown in parentheses behind the item. Some companies like to show the unit of measure separately from the item. In this case the item will be in the first column and the unit of measure will be in the second column. The unit of measure for each line is usually shown, even when it's clear wheat the unit of measure is (i.e. "each").

Summary

This format is typical of the formats used in industry. It gives the audience a good idea of the cost information, and also gives them confidence that you have a good grasp of the cost data. As you gain confidence with this format you may want to improve upon it. This is only the beginning of an important topic.

Return to Table of Contents