Project Management:Corporate Training
Instructional Design and Technology
Module 2: Project Estimating and Budgeting Project Leadership
Introduction
In a world of limited funds, as a project manage you're constantly deciding how to get the most return for your investment. The more accurate your estimate of project cost is, the better able you will be to manage your project’s budget. Therefore, estimating a project’s costs is important for several reasons. It enables you to weigh anticipated benefits against anticipated costs to see whether the project makes sense, allows you to see whether the necessary funds are available to support the project and serves as a guideline to help ensure that you have sufficient funds to complete the project.
Do Learning activity
Video:
Watch this video, and write a short paragraph to summurize what you understood.
https://www.youtube.com/watch?v=drjx84Gsqm8
Problem Statement
You have just completed the initiating processes of a small project and are moving into the planning processes when a project stakeholder asks you for the projects budget and cost baseline.
Write a short answer explaining what you should tell her.
Test
Please, click on this link and take the test.
https://docs.google.com/forms/d/1SHblYoPQN0e2F_Wot56ENhbuYR1JOYZsGiJW0EU1FU8/viewform
Summary
There are two processes within the cost knowledge area and planning process group: Estimate Costs and Determine Budget. Both are required in order to develop the project cost performance baseline.
The cost estimates are simply the costs associated with the work packages or activities within the project schedule. Depending on the work package or activity, the cost estimate may be determined using parametric, three-point, or analogous estimating techniques.
It is important for all cost estimates to include any assumptions that were made, where did the estimate originate, who provided the information, level of confidence, etc.
The budget is built using the cost estimates and the project schedule. The budget provides a view of how much the project is estimated to cost both from a total and a periodic perspective. This budget feeds the cost performance baseline which is then used as critical ingredient in performing earned value analysis and other cost management variance analysis techniques.
The project budget must be in alignment with the organization’s funding limits in order to ensure the funding is available and has been appropriated.