Key Factor That Drives The Cost Estimation

(TCO B) You are the project manager for three projects. You are about to estimate costs for these three projects. Given the below information on each project, recommend an appropriate estimation method and justify your answer for each.

592 Week 1 DQ 1 WBS Construction PROJ 592 Week 1 DQ 2 Project Cost Estimates and Assumptions PROJ 592 Week 2 DQ 1 Cost Components PROJ 592 Week 2 DQ 2 Estimating Processes PROJ 592 Week 3 DQ 1 Project Schedules PROJ 592 Week 3 DQ 2 Sensitivity Analysis PROJ 592 Week 4 DQ 1 Resource Allocation and Leveling PROJ 592 Week 4 DQ 2 Advanced Schedule Techniques PROJ 592 Week 5 DQ 1 Earned Value Calculation PROJ 592 Week 5 DQ 2 Project Monitoring and Control & EV PROJ 592 Week 6 DQ 1 Forecasting Project Completion Cost PROJ 592 Week 6 DQ 2 Project Control PROJ 592

Describe common practices to estimate the duration of project activities as well as real reasons that cause project delays.

1.2 The basis of an estimation is made up of three main categories. These are Labour, Materials and Plant and together, they define the approximated final price of the project. However, these do not include extras such as overheads, profits or preliminaries.

A) The weekly budget is formed by only using the early start times of each activity.

Influence of internal resources and financial capabilities on financial plan – a resource-based view (RBV) of the hospital will help assess resources within the organization (Lee, Lee, and Pennings, n/a). RBV looks at the firm as a bundle of internal resources and the influence these attributes have on the firm’s competitive advantage and performance. Some of the RBV include human, technological, financial resources, organizational culture, and managerial capabilities (Lee, Lee, and Pennings, n/a). The strategic manager and leadership team will look at the internal resources such as personnel and equipment to assist in the decision-making of the project. New equipment is needed for the new addition, will it be possible to sell the existent old equipment in the department and use that money to cost some of the new purchase. During the construction, some of the services will be limited; the organization needs to consider the possibility of moving some of the personnel to other departments if they meet qualifications to perform new tasks.

According to Rajasekaran and Lalitha (2010 ) the cost is an estimated amount given for an item or a global expense that the owner of the enterprise

Part of project management is the estimation of the project cost. The budget can be derived from the project plan by looking at the following criteria (Marchewka, 2009):

We used PV (planned Value), AC (actual cost), and EV (earned value) to calculate SPI (schedule performance index), SV (schedule variance), CPI (cost performance index), and CV (cost variance). Among these indicators, SPI and SV show whether a project is behind schedule or not, and CPI and CV indicate whether a project is under budget. Therefore, the statuses of the schedule and cost of technical infrastructure, software customization, and combined projects can be easily and clearly checked, respectively.

The cost planning is one of important phases for project management. It will goes through whole project’s life cycle. It is foundation of project and it will tell the project are measured, reported and controlled in every process. Estimating is the process of forecasting or approximating the time and cost of completing project deliverables.

In field of project management, there are a plethora of mechanisms under perpetual reevaluation. One specific segmentation of project management under such scrutiny pertains to cost duration, which is the time and monetary costs of completing individual tasks within the project’s critical path (IBM Knowledge Center, 2016). The process of monitoring and evaluating the time and financial impacts of each task is referred to as cost duration analysis (IBM Knowledge Center, 2016). A chief concern of cost duration analysis is identifying tasks within the project’s critical path which can reduce project duration (PMI, 2013). A common approach to reducing a project’s duration is task “crashing” (PMI, p.181). According to The Project Management Institute (2013) crashing refers to the process of methodical determining the financial value of increasing a critical path task’s resources in order to decrease project duration (p.181).

4. During which month of the project are the highest and lowest costs expected to

For instance, the concept of cost estimation which assists in estimating future expenditure as the expenditure depends on the cost of the respective activities can be applied in the setting of a budget which is simply an estimate and schedule of all costs required to be assigned to an activity. One can make an estimation of the resources required for an activity by applying the cost estimation techniques. Since there are limiting factors to each activity such as scarcity of resources for activities, the concept of constraints can be applied together with the concept of cost volume profit analysis to ensure that maximum benefits are driven from the scarce resources and the number of activities that are available. This facilitates the allocation of resources that most equitable and profitable. The theory of constraints is also applicable in the process of setting up budgets. In setting up budget one considers the amount of resources that are available and cannot therefore set a budget plan that exceeds the amount of resources that are available. This implies that the budget is constrained by the amount of

The purpose of this paper is to answer a few important questions: Why do companies allocate costs? How do companies allocate costs? And how this cost allocation can affect the decision making of the company. It is important for the companies to find the proper method to allocate the costs. Cost allocation is an important issue in many companies because many of the costs associated with designing, producing and distributing products and services are not easily identified with the products and services that are created. It would have been easier for companies to allocate cost if costs were directly traceable with the products and the cost allocation would have been minor issue for the company. The decision-making

* Many IT professionals think that preparing cost estimates is a job for accountants when in fact, it is a very demanding and important skill that project managers need