06 Project Planning -Budgeting

8/6/2019 06 Project Planning -Budgeting

http://slidepdf.com/reader/full/06-project-planning-budgeting 1/22

Principles of Project Management

Hisham Rafik, MBA, PMPPresented By:



Principles of Project Management 2© Knowledge 2008

Course Outline1. Project Management Framework

2. Project Initiation

3. Project Planning - Scope Definition

4. Project Planning - Schedule Development5. Project Planning - Risk Management

6. Project Planning - Budgeting




Section Six

Project Planning Budgeting




Project Planning Process

Scope Definition

Schedule Development

Risk Management Plan

Budgeting

Plan Compilation and Approvals




The Profit Equation

Revenue Set by sales

- Costs PM responsibility

Profits Company Target




Types of Cost Direct costs

1. Fixed costs2. Variable costs

3. Other project-related costs

Indirect costs

General & Admin (G&A)

Marketing & Sales (M&S) Research and Development (R&D)

COGS = Cost Of Goods Sold




Direct Costs1. Fixed Costs (Task independent)

Initial Costs Project office setup costs Project insurance Project financing

Costs incurred across the whole project duration PM & all fixed resources

Depreciation of fixed assets Rentals

Allocated project contingency/risk reserve




Direct Costs2. Variable costs (Task dependant)

Manpower

Own resources:

Use Fully loaded rates to accommodate othercosts needed/utilized by your team:

Salaries + benefits + computer + office +

training + company car + …

Outsourced labor:

Extra costs for utilization of resources

computer + office space + training




Direct Costs2. Variable Costs (continued)

Subcontractors Turn-key services (might include equipment/material

supplies)

Materials Equipment sold in the project and constitute a part

of the final product/deliverable

Turn-key Equipment SuppliesMaterial consumed in the project

MachinesDepreciation of temporarily used Company assetsRentals of tools used upon need




Direct Costs3. Other project-related costs

Warehousing

Customs and custom clearance

Some task-specific insurances

Transportation




Indirect costs General & Admin (G&A)

HR, CFO, Supply Chain, Administration

Marketing & Sales (M&S)

Research and Development (R&D)




Planning

7.1 Cost Estimating

7.2 Cost Budgeting

Controlling7.3 Cost Control

Process Orientation




Process of developing an approximation (or estimate) of the

cost of the resources needed to complete each the scheduleactivity.

Difference between cost estimating and pricing: Cost estimating: Assessing how much it will cost the organization to

provide the product or service

Pricing : Assessing how much the organization will charge for theproduct or service

Cost Estimating




Inputs1.Enterprise environmental

factors2.Organizational Process

Assets

3.Project Scope

Statement4.WBS

5.WBS Dictionary

6.Project Management Plan• Schedule

management plan

• Staffing

management plan• Risk register

Tools&Techniques

1. Analogous Estimating2. Determine Resource

Cost Rate

3. Bottom-up Estimating

4. Parametric Estimating5. Project Management

Software

6. Vendor bid analysis

7. Reserve analysis

8. Cost of Quality

Outputs1. Activity Cost

estimates

2. Activity Costestimates Supportingdetail

3. Requested Changes

4. Cost management

plan (updates)

Cost Estimating




1. Enterprise environmental factors

Marketplace conditions Commercial database

2. Organizational Process Assets

Cost estimating policies Cost estimating templates

Historical information

Project files Project team knowledge

Lessons learned

Cost Estimating, Inputs




1. Analogous estimating (Expert judgment)Used to estimate total project costs if there is a limited

amount of detailed information

2. Bottom-up estimating

Estimating the cost of individual work items and thenrolling up the costs to arrive at a project total

3. Parametric estimating

Using project characteristics (or parameters) in amathematical model to predict costs (e.g., price per squarefoot)

Cost Estimating, Tools & Techniques






2. Supporting detail

Description of estimated scope of work

Documentation of the basis for the estimate

Documentation of any assumptions made An indication of the range of possible results

3. Requested changes4. Cost management plan (updates)

Cost Estimating, Output




Aggregating the estimated cost of the

individual schedule activities or work

packages, to establish a total cost baseline

for measuring project performance

Cost Budgeting




Inputs

1. Project scopestatement

2. WBS

3. WBS dictionary

4. Activity cost estimates

5. Activity costestimatessupporting details

6. Project schedule

7. Resource calendars

8. Contract

9. Cost managementplan

Tools&Techniques

1. Costaggregation

2. Reserve analysis

3. Parametricestimating

4. Funding limitedreconciliation

Outputs

1. Cost baseline2. Project funding

requirements

3. Cost management

plan (updates)4. Requested changes

Cost Budgeting




1. Cost baselineTime phased budget that will be used as a

basis against which to measure, monitor

and control the overall cost performance

on the project

Cost Budgeting, Outputs




Thank You

Documents

06 Project Planning -Budgeting