PM Assignment 3

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University of Texas, Arlington *

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5373

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Industrial Engineering

Date

Apr 3, 2024

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pdf

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4

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Name: Shamika Awasarmol UTA ID: 1002115033 Project Management: INSY-5373-002 Assignment 3 CHAPTER 5 Review Questions: 1. Why are accurate estimates critical to effective project management? Without accurate time and cost estimates project control is ineffective. Inaccurate estimates can make the difference between profit and loss. • Estimations of time and cost play crucial roles in the process of project planning. • The accuracy of estimates is crucial for effective project control. • Accurate assessments are essential for making informed choices. • Estimations are employed to ascertain the duration and expenses of a project. • Estimations are employed in determining the requirements for cash flow. • Estimations are employed to create budgets that are phased over time and set the project's foundational reference point. • Lack of estimations leads to inaccuracies, ultimately causing both time and cost overruns or underruns. • Engaging in estimation activity minimizes mistakes. 2. Why is it difficult to estimate mega project (e.g., airport, stadium) costs and benefits? Initially, the 2–5-year timeframe for accomplishing substantial, intricate projects poses challenges in precisely predicting expenses and user requirements. Furthermore, the intricate nature of such undertakings complicates the accurate assessment of all associated costs. Lastly, the level of risk involved is considerable; when complications arise, they tend to do so on a substantial scale. Despite these circumstances indicating a need for a cautious estimate, the opposite often happens. Either unbridled enthusiasm or deliberate manipulation is employed to advocate for an inflated outlook on the project
Discussion Questions: Portland Aerial Tram 1. Can you think of a local public project that had significant cost overruns like the Portland Tram project? While there have been many significant projects that have gone wrong owing to cost overruns across the world, I believe the ODOT (Oregon Department of Transportation) in Oregon is a good example. While the project's original budget was $450 million, the current estimate is between $715 million and $795 million, and perhaps more concerning is the fact that the higher estimate may go up to or beyond $1 billion if major revisions to the project desired by local officials are considered. 2. Do you agree with the statement that “nothing great would ever be built if people knew in advance what the real costs and challenges were”? I concur with the assertion that if individuals were fully aware of the true costs and challenges in advance, many groundbreaking projects might never come to fruition. It is only natural for people to be hesitant about undertaking high-risk endeavours. Given that virtually all projects, especially large-scale ones, inevitably encounter cost and other significant challenges, it is likely that people would shy away from such initiatives, resulting in a lack of progress. Initiating high-risk projects despite the uncertainties is beneficial because it catalyzes project commencement. The essence of projects lies in their initiation, and through this process, we gain valuable insights on how to effectively manage and complete them. This contrasts with the scenario where projects are never initiated due to fears of potential cost over runs. 5.3 Estimate Accuracy 1. Why is the range so much higher for IT projects than construction projects? The range of cost variation tends to be considerably greater for IT projects compared to other construction endeavours. This is primarily attributed to the dynamic nature of client requirements in IT projects, which can lead to scope creep and budget adjustments. In cases where project scopes evolve, the budgets are subject to more frequent changes, and the potential for both overestimation and underestimation is relatively higher. This phenomenon is less common in other types of construction projects.
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