Project Milestone Schedule and Project Budget
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Estimating the total cost of the project is both a science and an art. There are several techniques for developing an estimate of total project cost which becomes your project budget. The authors of “Project Management in Practice” describes top-down and bottom-up budgeting. The PMBOK (PMBOK® Guide) also describes analogous, parametric and three-point estimating. All these tools and techniques have value and must be applied using expert judgment as described on page 204 of the PMBOK (PMBOK® Guide).
Most project cost estimates are derived from the cost estimate of the work packages established when developing the project WBS. The direct cost on the project represents the total cost of all work to be performed to produce the deliverables of the project. All work to be performed on the project should be captured in the work packages when developing the WBS.
After the project cost estimate is developed, the project management team tracks the cost expended against the cost estimate, as the project is executed. By definition, a project cost estimate is wrong. This means the actual cost expended is almost never the same as the budget. Since the estimate is wrong, we need to track expenditures against the amount of work performed and the actual cost of that work versus the estimated cost. We use techniques such as the CPI and SPI to better determine the cost performance on a project.
Review the WBS to estimate cost for each of the four phases of the construction project plan. Explain the estimating techniques and assumptions used.
The specific parts of the St. Dismas Assisted living facility case study you will need to prepare this week’s elements of the project plan are listed below.
Meredith, J.R., Shafer, S.M., Mantel, Jr., S.J., Sutton, M. (2014). Project management in practice (5th ed.). Hoboken, NJ: Wiley.
Part 2: St. Dismas Assisted Living Facility Project Budget Development—2 (pp. 147-148)
Preliminary Project Budget (pp. 147-148)
Project Plan: Project Cost Estimates
provides a thorough and detailed estimate of the costs for all activities for each of the four phases in a case study project
Project Plan: Cost Estimating Tools and Techniques
provides a thorough and detailed explanation of two qualitative and two quantitative techniques that can be used to develop project cost estimates.