QMDS400 Ch9

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Budgeting Projects
Chapter 9
Contemporary Project Management
Kloppenborg

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Introduction to Project Budgeting
• Involves developing a cost management plan for a project • For small projects
• Ensure accurate cost estimates
• Secure the funding
• Develop cost reporting procedures

• For large projects
• AND develop and use accurate cash flow estimates
Cost management plan – “the document that sets out the format and establishes the activities and criteria for planning, structuring, and controlling the project costs.”
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All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Types of Costs –
Regular vs. Expedited

• Regular costs occur when progress can be made by normal work hours and purchasing agreements (the preferred cost)
• Expedited costs occur when the project must be conducted faster than normal
• Overtime and extra charge apply

• Vital to understand schedule pressures and resource demands as costs are estimated
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© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Types of Costs – Estimate vs.
Contingency Reserve

Estimate – “a quantified assessment of the likely amount
… It should always include an indication of accuracy.”
PMBOK® Guide
Reserve – “a provision in the project management plan to mitigate cost and/or schedule risk. Often used with a modifier (e.g. management reserve, contingency reserve) to provide further detail on what types of risk are meant to be mitigated.” PMBOK® Guide
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