HISD slide6
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Transcript of HISD slide6
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PROJECTCOSTMANAGEMENT
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WHATISCOSTANDPROJECTCOST
MANAGEMENT?
Cost is a resource sacrificed or fore-gone to achieve aspecific objective or something given up in exchange
Costs are usually measured in monetary units like dollars
Project cost management includes the processes required
to ensure that the project is completed within an approvedbudget
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PROJECTCOSTMANAGEMENTPROCESSES
Resou rce planning: determining what resources
and quantities of them should be used Cost est imating : developing an estimate ofthe
costs and resources needed to complete a
project
Cost budget ing: allocating the overall cost
estimate to individual work items to establish a
baseline for measuring performance
Cost cont ro l: controlling changes to the projectbudget
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BASICPRINCIPLESOFCOSTMANAGEMENT
Prof i tsare revenuesminusexpenses
Life cyc le cos t ingis estimating the cost of a project over itsentire life
Cash f low analysisis determining the estimated annual
costs and benefits for a project
Benefi tsand costscan be tangib leor in tangib le, directorind irect
Sunk costshould not be a criteria in project selection
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RESOURCEPLANNING
The nature of the project and the organization will
affect resource planning
Some questions to consider:
How difficult will it be to do specific tasks on the project?
Is there anything unique in this projects scope statement that
will affect resources?
What is the organizations history in doing similar tasks?
Does the organization have or can they acquire the people,
equipment, and materials that are capable and available for
performing the work?
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COSTESTIMATING
An important output of project cost management is
a cost estimate
There are several types of cost estimates and tools
and techniques to help create them
It is also important to develop a cost management
plan that describes how cost variances will be
managed on the project
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TYPESOFCOSTESTIMATES
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Type of Estimate When Done Why Done How Accurate
Rough Order of
Magnitude (ROM)
Very early in theproject life cycle,
often 35 years
before project
completion
Provides roughballpark of cost for
selection decisions
25%, +75%
Budgetary Early, 12 years out Puts dollars in the
budget plans
10%, +25%
Definitive Later in the project,