Lecture Project management in practice - Chapter 8: Project cost management

Lecture Project management in practice - Chapter 8: Project cost management. This chapter presents the following content: From work package to budget, a project perspective of cost management, cost management plan, simple time-phased budgeting,...

CHAPTER Project Cost Management Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-1 From Work Package to Budget Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-2 Introduction ore elements of project cost management Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-3 A Project Perspective of Cost Management • Large Capital Items – The project manager should specifically identify any large capital items that will have to be purchased by the project • Long Lead-Time Items – Items (products/services) that have a long lead-time must be identified early in the project life cycle Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-4 Cost Management Plan Consider… • Governance, policy and procedure • Contingency • Estimating • Lessons learned • Funding sources • Systems And… • Large Capital Items Long Lead-Time Items CoQ Copyright â 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-5 Simple time-phased budgeting hen estimating identified costs associated with the Work Packages, don’t forget: • Other costs not included in the tasks and/or work packages Examples of these would include the cost of the project manager, office space, telephone costs, ICT equipment and employment overheads • The project’s cash in-flows (income) Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-6 Simple Time-phased Budgeting (cont.) Simple project budget structure, by category Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-7 Simple Time-phased Budgeting (cont.) Simple project budget structure, by WBS items Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-8 More Complex Time-phased Project Budgets Direct labour budget roll-up ($000) Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-9 More Complex Time-phased Project Budgets (cont.) Two time-phased work packages (labour cost only) Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-10 Patient Entry Project Patient entry project: Time-phased work packages assigned Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-11 Project Scope Integration Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-12 Key Terms • • • • • • • • • • • actual (value) baseline contingency cost baseline finance/ERP systems large capital items long lead-time items make or buy analysis planned (value) time-phased budget variance Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-13 ... Gray, Project Management in Practice, 1e 8-1 1 Project Scope Integration Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-1 2... 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-2 Introduction ore elements of project cost management Copyright © 2013 McGraw-Hill Education... Long Lead-Time Items • CoQ Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e 8-5 Simple time-phased budgeting hen estimating identified