University project help

INSTRUCTOR’S RESOURCE MANUAL

CHAPTER EIGHT
Cost Estimation and Budgeting

To Accompany

PROJECT MANAGEMENT:
Achieving Competitive Advantage

By
Jeffrey K. Pinto

CHAPTER EIGHT

PROJECT PROFILE – Boston’s Central Artery/Tunnel Project: Updated and Complete
8.1 COST MANAGEMENT Direct vs. Indirect Costs Recurring Versus Nonrecurring Costs
Fixed Versus Variable Costs
Normal versus Expedited Costs
8.2 COST ESTIMATION
Learning Curves in Cost Estimation
Project Management Research in Brief: Software Cost Estimation
Problems with Cost Estimation
PROJECT PROFILE – Heathrow Airport’s New Terminal Five Development
8.3 CREATING A BUDGET
Top-Down Budgeting
Bottom-Up Budgeting
Activity-Based Costing
8.4 DEVELOPING BUDGET CONTINGENCIES
Summary
Key Terms
Solved Problems
Discussion Questions
Problems
Case Study 8.1: The Dulhasti Power Plant
Case Study 8.2: London’s Millennium Dome
Internet Exercises
PMP Certification Sample Questions
Integrated Project: Developing the Cost Estimates and Budget
Bibliography
TRANSPARENCIES

8.1 SOURCES OF PROJECT COSTS

1. DIRECT VS. INDIRECT COSTS

2. RECURRING VS. NON-RECURRING COSTS

3. FIXED VS. VARIABLE COSTS

4. NORMAL VS. EXPEDITED COSTS
8.2 LEARNING CURVE MODEL

8.3 PROBLEMS WITH COST ESTIMATION

1. LOW INITIAL ESTIMATES

2. UNEXPECTED TECHNICAL DIFFICULTIES

3. LACK OF DEFINITION

4. SPECIFICATION CHANGES

1. EXTERNAL FACTORS
8.4 EXAMPLE OF A TIME-PHASED BUDGET

Months
Activity
January
February
March
April
May
Total by
Activity
Survey
4,000

4,000
Design

5,000
3,000

8,000
Clear Site

4,000

4,000
Foundation

7,500

7,500
Framing

8,000
2,000
10,000
Plumb &
Wire

1,000
4,000
5,000
Monthly
Planned
4,000
9,000
10,500
9,000
6,000

Cumulative
4,000
13,000
23,500
32,500
38,500
38,500

8.5 CALCULATING DIRECT LABOR