Cost Estimating Tools
The vehicle maintenance facility is a big project, and the project manager has to estimate the cost of each activity by applying diverse cost estimating tools. For this particular project, one of the most appropriate cost estimating tools is analogous estimating. In this specific project, the information regarding several project activities is limited. Consequently, to get quick results, analogous estimation seems pertinent. Project management can navigate the cost of the previous project. It looks better to examine historical records regarding each activity and predict or estimate the cost.
Depending on this information or historical insights, there is a need to use an expert’s judgment. The estimation of the cost must be accurate if the similarity is high. It is a top-down estimation, which can work well in this project. Another appropriate technique or tool to estimate the cost of each activity is bottom-up estimating. Each activity is linked with details. Based on the details of each activity, the cost can be calculated. It is an accurate technique than the previous one, but it is time-consuming and costly, which can also create an impact on overall project cost. Work breaks down structure can become a relevant source for this useful cost estimation (Project management skills.com, 2019).
Develop and Aggregate the Cost of Resources Needed
The cost of the resource is needed in each project activity. In short, each activity needs adequate human, financial, material, and financial resources. In this particular project, the cost of the resource which is needed is material cost, in each activity, the material will be used as an input to conduct or complete the activity. It is a fact that the costs of material in each activity can be high or low, as it depends on the nature and intensity of each project activity. Material is a prominent resource, and the cost of material must be incurred (Stackpole, 2013).
On the other hand, the cost of people in terms of salary or wages is also to be included. In multiple activities, project management can have employees on salary and daily wages. Hence, both daily wages and salaries or people must be included in the cost plan or estimation. Apart from it, the cost of supplies is also to be incurred in each activity. Each activity will need an adequate supply, and without these supplies, the activity cannot be completed. The cost of technologies and facilities in each project activity is also to be concluded (Wysocki, 2011). After incurring all these costs, the total project cost can be determined. The entire project cost, which is estimated, is $ 1,162,366.
COST ESTIMATING WORKSHEET
| Project Title: | Vehicle Maintenance Facility | Date Prepared: | 5 April 2020 |
Cost management planning Components of your Cost Management Plan
The cost management plan is associated with multiple cost planning components. The first component in cost management planning is cost estimation. In this project, the project management has to estimate the cost of each activity. The project management has to plan or decide which cost estimation is needed, such as direct and indirect cost estimation or fixed and variable cost estimation. It is a fact that the project scope, project schedule, and other elements can be changed with the passage of time. It is essential to change or update the price or cost estimates (AnttiAinamo, Artto, E.Levitt, R.J.Orr, W.R.Scott, & Tainio, 2010).
One of the prominent parts of the cost management plan to prepare and navigate reports on expenses, and it should be done on a monthly or weekly basis. The project manager will have regular updates on project expenses, as it can facilitate in making some changes according to needs (Heldman & Mangano, 2009). The cost management plan component is project performance measurement. For instance, consistently measuring the project will help the project manager to confirm that it is within the budget and schedule. Another critical cost management component is a user-friendly interface. The most important thing for project management is to use or adopt a user-friendly interface to eliminate or reduce possible project hiccups. The team’s productivity in each activity can be increased with time, and ultimately, project cost can be reduced.
Furthermore, the cost variance plan is to be included in the cost management plan. The project team has to respond to any change or variance in the activity costing. The best thing that project management can do is to adopt activity-based costing instead of compiling all costs or operations. Even in the change control process, activity-based costing will help to keep the project efficient (Aaltonen & Kujala, 2010). The cost management plan, along with its components, can be changed with time due to any change in the project scope, schedule, and requirements. Accordingly, the project management of the maintenance facility must be aware of it (Venkataraman & Pinto, 2011).
COST MANAGEMENT PLAN
| Project Title: | Vehicle Maintenance Facility | Date | 5 April 2020 |
References
Aaltonen, K., & Kujala, J. (2010). A project lifecycle perspective on stakeholder influence strategies in global projects. Scandinavian Journal of Management, 26 (4), 381-397.
AnttiAinamo, Artto, K., E.Levitt, R., R.J.Orr, W.R.Scott, & Tainio, R. (2010). Global projects: Strategic perspectives. Scandinavian Journal of Management, 26 (4), 343-351.
Heldman, K., & Mangano, V. (2009). PMP Project Management Professional Exam Review Guide (7 ed.). John Wiley & Sons.
Project management skills.com. (2019, March 10). Project Cost Estimating Tools & Techniques. Retrieved from https://www.project-management-skills.com/project-cost-estimating.html
Stackpole, C. S. (2013). A Project Manager’s Book of Forms: A Companion to the PMBOK Guide (5 ed.). John Wiley & Sons.
Venkataraman, R. R., & Pinto, J. K. (2011). Cost and Value Management in Projects. John Wiley & Sons.
Wysocki, R. K. (2011). Effective Project Management: Traditional, Agile, Extreme (7 ed.). John Wiley & Sons.
