Project Planning and Budgeting

Introduction to Cost Management Plan

A cost control strategy refers to structuring the preparation and implementation of a project budget. Of course, this is to ensure that the project is completed on schedule and on budget. However, without a proper cost control plan, all those items will fail, which will be affected as failure to complete the project. Cost management, cost transparency, and cost-accounting is three of the most basic tools for cost management.

Cost Management Consists of Four Processes

Resource planning: Project managers will typically use one of the most important task fragmentation systems to demonstrate the project and its distribution in a hierarchy, beginning with resource planning. This document helps project management determine where most of the cost of the project will be and which elements will take the least amount of money.

Cost estimation: The second phase of cost estimation is an analysis process, which means that it can adjust as the project develops. This phase employs various evaluation techniques on conceptual objectives, historical experience, expert judgment, deterministic techniques, or component-by-component basis.

Budgeting: You may think that you had already allocated your budget during the cost estimation process, but you had only prepared the blueprint. This measure will make the project budget a bit more accurate, allowing it to excel. After the estimation phase, budgets are created and approved, and they are usually published in stages based on the success of the project. Instead of balancing the overall project schedule, it will assist the project in meeting its goals during each budgetary phase.

Cost control: A cost accounting strategy can assist both planning and management costs over the duration of the project's life cycle. The cost of the project can be tracked carefully as the project moves forward to ensure the cost.

Cost Estimation Tool

Analogous Estimating is the type of tool that should be used according to the bottom-up technique; the term is called “definitive technique" which refers to the estimation process. This is the most accurate procedure, but it is still the most time consuming and expensive. Here, the cost of each individual operation is calculated to the greatest degree of detail and then rolled to determine the overall project cost. Simply stated, project work will break down into the smallest task elements. It is an iterative method for estimating costs. This can be done at various stages of the project life cycle, as described in the cost control strategy. This process aids in the development of an expenditure benchmark.

Here in this report the budget allocation and cost estimation for Symposium Project Management, Finance, and Symposium are measured and shows through a table below.

Activity

Duration

Budget Allocation

Cost Estimation

AA

26

5.00%

5.00%

AB

40

5.00%

5.00%

BB

28

10.00%

10.00%

BD

12

10.00%

10.00%

CC

3

5.00%

5.00%

CD

5

5.00%

5.00%

DB

22

5.00%

5.00%

DE

13

5.00%

5.00%

EA

6

7.50%

7.50%

EB

29

7.50%

7.50%

FA

17

5.00%

5.00%

FC

13

5.00%

5.00%

GB

10

5.00%

5.00%

GE

3

5.00%

5.00%

HB

10

5.00%

5.00%

HD

13

5.00%

5.00%

IA

3

2.50%

2.50%

IB

6

2.50%

2.50%

Table 1: Cost estimation schedule

The cost management planning components are the essential of a project which needs to be predetermined. Implementing the project cost management strategy while improving profitability will help the company keep track of total expenditure. The steps that should be followed while preparing the cost management plan is:

  1. Estimate cost for managing project:
  2. Cost Budgeting:
  3. Cost Control:
  4. Performance Measurement:
  5. Reporting Formats:

Earned Value Analysis

Earned value analysis refers to a tool that helps the project manager work on a project in advance, in addition to determining the amount of spending and reviewing the expense. Eva gives a way to monitor the success of the project.

The key factors for the calculation of earned value analysis are: Schedule Variance, Cost Variance, Schedule Performance Index and Cost Performance Index. Here the schedule variance and schedule performance index help to measure the difference in project schedule between them and provide reasonable option to fix them out. The cost variance and cost performance index help to measure the difference in cost utilization between them and then controlling them.

Conclusion on Cost Management Plan

Under this report, it is determined that the cost management plan for a project should be made according to their requirement, objectives, time period and cost. Proper understanding of the project should be in the cost management plan required to make the project profitable to reduce costs. Cost management of the underlying project should be done using resource planning, cost estimation, budgeting, and cost control.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Management Assignment Help

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