PROJ6002 Vehicle Maintenance Facility Assignment Sample

• Subject Code : PROJ6002
• University : Laureate International Universities My Assignment Services is not sponsored or endorsed by this college or university.
• Subject Name : Project Management 3

Project Planning and Budgeting

Cost estimating techniques

There are various tools available to estimate the cost of a project like,

1. Expert Judgement
2. Analogous Estimating
3. Parametric estimating
4. Bottom-up estimating

1. Expert judgement: This is a cost estimate tool that uses the judgement of a specialized group to estimate the cost of the project.
2. Analogous estimating: This is an estimating method, where we use the cost of the similar project to estimate the cost of a project.
3. Parametric estimating: This is an estimating tool that uses the statistical relationship to estimate the cost of the project.
4. Bottom-up estimating: This is an estimating tool where cost is estimated at the activity level of the project.

In the current scenario, we have used the bottom-up approach to estimate the cost of activities. The cost of activities that is mentioned in the case is at activity level. Later, the cost is divided into labor cost, material cost and other costs.

As we are following the bottom-up approach of cost estimation, we have allocated the resources to each of the activities of the project and the cost of resource is calculated for the activities. Below is the screenshot of the resource allocation and cost of resources.

The cost management plan is the outline of the budgeted cost of the project, allocation of costs, and the cost control measures adopted to complete the project as per the schedule framed. (Team Clarizen, 2018)

The cost management planning components of the current project is listed below:

1. Resource Planning: We have allocated the no. of days and the resources to each of the activities. This process is known as resource planning.
2. Cost estimation: The cost estimation for the project is done at activity level using the bottom up approach of cost estimation technique.
3. Cost Budgeting: The total budget of the cost stands at $6,72,698.00 for 193 days.
4. Cost control: This is the process where the cost spent is periodically is scrutanized against the budgeted cost. This is done in a regular interval to review the overall performance of the project. If there is any deviation, then the proper care should be taken and proper corrective action should be taken at the earliest possible.

The earned value approach technique uses the information from three independent sources of financial data. These are the cost baseline for the project that looks at the project from a different perspective.

• Planned Value (PV): This looks at the expenditure planned for the project. It covers all the expenditure from the beginning to the end of the project.
• Actual Value (AV): This looks at the present expenditure.
• Earned Value (EV): This is the project progress that is originally planned expenditures for the work up to this time.

By using the earned value, we will determine the following figure to understand the status of the project.

• Schedule Performance Index: SPI = EV/PV

SPI measures progress achieved against progress planned. A schedule performance index less than1.0 indicates less work was completed than was planned and the same value greater than 1.0 indicates that more work was completed than was planned.

• Cost Performance Index (CPI): CPI = EV/AV

CPI measures the value of work completed against the actual cost. A cost performance index less than1.0 indicates that costs were higher than budgeted. CPI greater than 1.0 indicates that costs were less than budgeted.

• Scheduled Variance: Difference between Earned Value – Planned Value

A negative schedule variance would mean that the project is behind the schedule.

• Cost Variance = Earned Value – Actual Cost.

A negative cost variance means the project is not over budgeted and for the activities that have already taken place, the cost incurred is within the budget.

References for Project Planning and Budgeting

Team Clarizen. (2018). Clarizen. Retrieved August 15, 2020, from https://www.clarizen.com/cost-management-plan/#:~:text=In%20simple%20words%2C%20a%20cost,to%20complete%20all%20project%20activities.&text=The%20cost%20management%20plan%20in,be%20planned%2C%20funded%20and%20controlled.

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