05_0_Cost_100206.ppt

1,DAY 3,2,Agenda,Day 3Cost ManagementQuality ManagementSelf-Study,3,UNIT 5:Cost Management,4,Overview,Difficult for most test takersCovers a broad range of cost topicsEarned Value is tested heavilyDo not have to be an accountantCost issues are from the project managers perspectiveCalculator assigned by the testing center,5,Processes,Cost EstimatingCost BudgetingCost Control,6,1.Cost Estimating,Involves developing an estimate of the cost of the resources needed to complete the projectResourcesLaborEquipmentMaterialsEtcCost vs Price,7,1.Cost Estimating,InputsWBS,Staffing Management Plan,Carpenter,Roofer,Build Gazebo,Shingle,Frame,8,1.Cost Estimating,ToolsAnalogous estimating,Estimate based on similar projects.Also called Top-down estimating.,What will it cost to build House Plan B?,HousePlan B,9,1.Cost Estimating,ToolsDetermine resource cost ratesLabor cost per hourEquipment cost per day,$100/hr,$200/day,10,1.Cost Estimating,ToolsBottom-up estimating,$1,400,$400,$1,000,Carpenter,Roofer,$100/hr,$80/hr,11,1.Cost Estimating,ToolsParametric estimating,Uses some factor or formula.Examples:Building a House:Cost per Square FootPaving a Road:Cost per Lane mile,12,1.Cost Estimating,ToolsProject Management Software,Allows for“What if”games.Suppose we replace the ditch diggers with a Backhoe and operator.How would this affect our project cost?,13,1.Cost Estimating,ToolsReserve Analysis,Contingency and Management Reserves,14,Reserve Funds,$400,$560,15,Reserve Funds,$400,$560,Known Risk,16,Reserve Funds,$400,$560,Known Risk$20020%$40,17,Reserve Funds,$400,$560,Known Risk$20020%$40,Contingency,18,Reserve Funds,$440,$560,Known Risk$20020%$40,Contingency,$1000,19,Reserve Funds,$440,$560,Known Risk$20020%$40,Contingency,$1000,20,Reserve Funds,$440,$560,Known Risk$20020%$40,Contingency,$1000,Unknown Risk-Mgmt Reserve10%or$100=$1100,21,Pricing,Project Cost=$1100Plus Margin:Overhead 200 Profit 100-Price$1400,22,1.Cost Estimating,OutputActivity Cost Estimates,Activity A$1000Activity B$2500Activity C$1500,23,2.Cost Budgeting,Involves allocating cost to the work itemsAggregating cost to determine the project budgetEstablishing the Cost Baseline,24,2.Cost Budgeting,Inputs-WBS,Goal,Wk Pkg 2,Wk Pkg 1,25,2.Cost Budgeting,Activity Definition from Time Mgmt,Goal,WP 2,WP 1,Activity B,Activity A,Activity C,Activity D,26,2.Cost Budgeting,Inputs Activity Cost Estimates,Goal,WP 2,WP 1,B$600,A$400,C$200,D$300,27,2.Cost Budgeting,Inputs-Project Schedule(Network Diagram),B$600,A$400,C$200,D$300,S F,28,2.Cost Budgeting,Tools Cost Aggregation,$1500,$500,$1000,B$600,A$400,C$200,D$300,29,2.Cost Budgeting,Outputs Cost BaselineA time-phased budget used to measure performanceCost Baseline(S-Curve),30,2.Cost Budgeting,Project Schedule(Gantt Chart),B$600,A$400,C$200,D$300,$400$1200$1500,Cumulative cost over time,31,2.Cost Budgeting,Cost Baseline(S-Curve),$400,$800,$1200,$1600,32,3.Cost Control,Influencing factors that create changeDetermining that a change has occurredManaging changes when they do occur,33,3.Cost Control,