Total cost management (TCM) is the project cost engineering element that we often overlook when estimating for project logistics as part of a capital project. The concept has been around since the 1990s and is part of a process called “Total Cost Management” and has been part of the XELLZ Total Cost Analysis Plan (TCAP).
TCM is the effective application of professional and project logistics expertise to plan and control resources, costs, profitability (savings) and risks. Simply quantified, it is a systematic approach to managing cost throughout the project logistics life cycle. This is accomplished through the application of cost engineering and cost management principles, proven methodologies and the latest technology in support of the project logistics management process.
Costs in TCM include any investment of resources in the project logistics including time, monetary, human, and physical resources. Total refers to TCM’s comprehensive approach to managing the total resource investment during the project logistics life cycle of the project strategic assets.
TCM is an integrating process that not only maps the fields of practice of cost engineering, and also provides structure for costs of project logistics management, resources, and management accounting and administration practice. XELLZ TCM provides a unique project logistics costs perspective that is often missing from traditional and financial focused approaches. The Figure below illustrates how TCM, with roots and emphasis in project logistics management and project logistics control, has a balanced focus on services and capital costs, project and operational work processes, and resources of all types. In other words, it covers the “total costs” of the project logistics management.
Traditionally, the field of project logistics management begins with the “initiation” of a project. The most well-known behavior of project logistics management process is based on the Project Management Institute’s Project Management Body of Knowledge (PMBOK). However, the PMBOK does not address what happens before a project is initiated; With other words, how does project logistics come into being? how is the project identified, scoped and decided upon among other operating options available to a company. XELLZ TMC looks at the process upstream of project logistics management. What precedes project logistics management is referred to as strategic asset management. A unique element of the XELLZ TCM process is that we integrate all the elements that a project and organization must take to deploy its project logistics strategy in the most cost-effective way. This includes monitoring and becoming conscious of any performance issues and completing a project and delivering a modified or new asset to the company’s project.
We at XELLZ are conscious of the fact that TMC is an overlooked element in most EPC companies when it comes to project logistics. XELLZ is able to project the savings and actual cost better then traditional project logistics management providers.