Unformatted text preview: BSBPMG514 Manage project cost
ASSESSMENT COVER SHEET
Student ID sv045585 Student Name
First Name: JEISSON ARMANDO
Last Name: GONZALEZ MONROY Student’s declaration:
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understand I may appeal if I believe the assessment is not equitable, fair or just. ✔ I agree to participate in this assessment, and I am ready to be assessed. ✔ I declare that the attached is my own work or in collaboration with other members of a group
as required. ✔ I have acknowledged all sources where appropriate in accordance with ILSC’s Academic
Integrity Policy, and I believe other group members have done the same. Submitting your assessment: Complete all assessment tasks, save, and upload in Moodle for grading. Please
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Please verify each of the following principles of assessment by placing a tick in each box. Refer to the
assessor's handbook for further information if required. ✔ Authentic: The assessor is assured that the evidence presented for assessment is the learner’s
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described in the module or unit of competency and associated assessment requirements. ✔ Current: The assessor is assured that the assessment evidence demonstrates current
competency. This requires the assessment evidence to be from the present or the very recent
past. ✔ Sufficient: The assessor is assured that the quality, quantity and relevance of the assessment
evidence enable a judgement to be made of a learner’s competency. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 1 of 27 How to work through your assessment
Your assessment is designed to assess your performance of competency for the unit
BSBPMG514 Manage project cost, Release 1.
Your assessor will help you fully understand assessment requirements for this unit.
The features of this assessment are detailed in the following table.
Features of the
assessment resource Explanation Assessment
scope This unit describes the skills and knowledge required to identify,
analyse and refine project costs to produce a budget, and to use this
budget as the principal mechanism to control project cost.
It applies to individuals responsible for managing and leading a
project in an organisation, business, or as a consultant.
The key outcomes include: Assessment
overview Complete all the
following tasks Determine project costs Monitor and control project costs Complete cost-management processes To demonstrate competency, you must successfully complete all
Task 1: Online Moodle Quizzes
Task 2 : Short Answer Questions
Task 3: Project - Manage Cost within a Project Part 1: Cost Management Plan Part 2: Cost monitoring and control Part 3: Reflection Summary Task 1: Online Moodle Quizzes
Complete online Moodle quizzes for each topic to demonstrate your
knowledge of the unit requirements. These are self-marking.
Task 2 : Short Answer Questions
Task 3: Project – Manage Cost within a Project
Develop a cost management plan, meeting with stakeholders in a
simulated work environment and monitoring and controlling project
costs as well as reporting on cost management issues. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 2 of 27 Task 1: Please complete the following quizzes
on Moodle: Topic 1: Online Quiz
Topic 2: Online Quiz
Topic 3: Online Quiz Task 2: Short Answer Questions
1. List the three main processes of project cost management that are part of the Planning
Process Group. (minimum 20 words)
Resource planning: The project activities need to be defined.
Cost estimating: Predict how much it will cost to perform the project activities.
Cost budgeting: The budget gives an overview of the periodic and total costs of the project
Cost control: Periodical monitoring of project costs and progress 2. Define project cost management. (minimum 50 words)
Cost management is the process of estimating, allocating, and controlling the costs in a
project. It allows a business to predict coming expenses in order to reduce the chances of it
going over budget.
Projected costs are calculated during the planning phase of a project , as the project plan is
executed, expenses are documented and tracked, once the project is completed, predicted
costs vs. actual costs are compared, providing benchmarks for future cost management plans
and project budgets. 3. List a minimum of three (3) environmental enterprise factors that can influence the plan
cost management process.
The environmental factors of the company refer to conditions that are not under the control of
the project team and that influence, restrict or direct the project. The environmental factors of
the company that may influence the process Monitor and Control Project Work include, among
• Government or industry standards (eg, regulatory body standards, codes of conduct, product
standards, quality standards and manufacturing standards);
• The work authorization systems of the organization;
• The risk tolerances of the interested parties; 4. List four Organisational Process Assets that can influence a project cost plan.
*Financial control procedures
*The procedures for the management of incidents and defects
*Procedures for the control of changes, including those related to variations in scope,
schedule, cost and quality.
Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 3 of 27 5. In your own words list and explain four (4) tools and techniques which are used in the
estimate cost process? (200 words for each tool or technique)
This technique is employed to estimate the project cost when limited detail about the project is
available. Therefore, this technique does not provide a very reliable estimation. The primary benefits of
this technique are its lower cost and quick results.
In analogous estimation, the cost of the project is estimated by comparing it with similar projects
previously completed by your organization. Here, you will look into your organization’s historical
records (i.e., an organizational process assets) for prior completed projects similar to your own. You
will select the project which is closest to your project and use your expert judgment to determine the
cost estimate of your current project.
The analogous estimating is also known as the top-down estimating. PARAMETRIC ESTIMATING
Like analogous estimating, parametric estimation uses historical data to calculate cost estimates;
however, it also utilizes statistical data. It takes variables from similar projects and applies them to the
For instance, in a previous project, we take the cost of concrete per cubic meter, then calculate the
concrete requirement for the current project and multiply it with the cost obtained from the previous
project. This will provide the total cost of concrete for your current project.
In the same way, you can calculate the cost of other parameters (men, materials, and equipment).
The accuracy of this process is better than the analogous estimation because it employs more than
one data set. THREE-POINT ESTIMATING
This technique is employed to reduce the biases and uncertainties in estimating assumptions. Three
estimates are determined instead of finding one estimate, and then their average is taken to reduce
the uncertainties, risks, and biases.
PERT is the most commonly used method in three-point estimation technique.
Three PERT estimates are as follows:
Most Likely Cost (Cm): Considers a typical case and everything goes as usual.
Pessimistic Cost (Cp): Considers the worst case and assumes that almost everything goes wrong.
Optimistic Cost (Co): Considers the best case and concludes that everything goes better than
PERT estimate formula is:
Ce = (Co + 4Cm + Cp) / 6
Where Ce = Expected Cost
Estimates derived from this technique are better than the two techniques presented earlier because it
minimizes the biased view from the data and provides a more accurate estimate. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 4 of 27 BOTTOM-UP ESTIMATING
The bottom-up estimating technique is also called the “definitive technique.” This technique is the most
accurate, time-consuming, and costly technique for estimating the cost of a project. Here, the cost of
every single activity is determined with the highest level of detail at the bottom level and then rolls up to
calculate the total project cost.
Here, the total project work is broken down into the smallest work components. Each component cost is
estimated, and finally, it is aggregated to determine the project’s cost estimate. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 5 of 27 6. Explain the process of estimated costs and its key benefits? (minimum 50 words)
Estimated costs represent only an attempt in anticipation of actual costs and are subject to corrections as
they are compared with them. This system consists of predetermining the unit costs of the production
estimating the value of the direct raw material, the direct labor and the indirect charges that are
considered should be obtained in the future.
Comparing the estimated costs with the real ones later and adjusting the corresponding variations. 7. Describe the process Determine Budget and its Key benefit? (50-100 words)
You can find two great advantages when planning and making budgets: facilitate the adequate use of
resources and show the results that will be obtained from implementing the plans.
Main steps for creating a budget:
Main steps to make a budget
* Determine the restrictions: Objectives or requirements, term and resources.
* Specify resources: Labor, external services, supplies, capital goods and others.
* Assign the monetary value
* Periodify 8. List 5 inputs that are used to determine a budget?
*Cost Estimates of Activities
*Basis of the Estimates
*Base Line of Reach
*The Chronogram of the project
*Determine the Budget 9. What is a cost management plan and what is its purpose? (minimum 100 words)
A cost management plan is a document that details how you will manage the costs of your project. As
well as defining how your project costs will be managed, your cost management plan will also identify
who is responsible for managing them and it describes how the project costs will be measured. It will
outline who has the authority to approve any changes to the project budget and who you need to report
any findings to. Your cost management plan can allow you to predict the expenditure of your project and
reduce the chance of going over budget. 10. What is Earned Value Management (EVM)?
Earned Value Management (EVM) helps project managers to measure project performance. It is a
systematic project management process used to find variances in projects based on the comparison of
worked performed and work planned. EVM is used on the cost and schedule control and can be very
useful in project forecasting. The project baseline is an essential component of EVM and serves as a
reference point for all EVM related activities. EVM provides quantitative data for project decision making. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 6 of 27 11. Explain Cost Performance Index (CPI) and what is its common formula?
The cost performance index (CPI) is a measure of the financial effectiveness and efficiency of a project. It
represents the amount of completed work for every unit of cost spent.
As a ratio it is calculated by dividing the budgeted cost of work completed, or earned value, by the actual
cost of the work performed.
If the ratio has a value higher than 1 then it indicates the project is performing well against the budget. A
CPI of 1 means that the project is performing on budget. A CPI of less than 1 means that the project is
over budget. 12. What is Schedule Performance Index (SPI) and its formula? (minimum 50 words)
The Schedule Performance Index indicates how efficiently you are actually progressing compared to the
planned project schedule.
The Schedule Performance Index (SPI) is a measure of schedule efficiency, expressed as the ratio of
earned value to planned value.”
Schedule Performance Index = (Earned Value) / (Planned Value) SPI= EV / PV 13. If a cost estimate is provided as $50 000 +/- 20% what is its range?
The range is +/-10.000 That is to say: 40.000 to 60.000 14. A project has an Earned Value (EV) of $10 000, Actual Cost (AC) of $8000 and Planned Value
(PV) of $8000. Using the correct formula what is the project’s Schedule Variance (SV)?
Schedule Variance can be calculated by subtracting planned value from earned value.
Schedule Variance = Earned Value – Planned Value
SV = 10000 - 8000 = 2000 15. You’re working on a project to be completed in 14 months and the cost of the project is $1
million. Seven months have passed and $620,000 has been spent but you find only 40% of
the work has been completed so far. Using the correct formula find the Cost Performance Index (CPI) for this project? Is the Project currently over or under budget?
The Cost Performance Index can be determined by dividing the earned value by actual cost.
Cost Performance Index = (Earned Value) / (Actual Cost)
CPI = 400000 / 620000 = 0.64
The Project is by far over the budget Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 7 of 27 16. You’ve discovered that fluctuating international exchange rates mean you cannot meet your
Current Project Cost baseline. You completed a bottom up estimate of the remaining work
which you have calculated at $2.5 million. The project’s current actual cost (AC) is $3.5
million. Using the correct forecasting formula calculate the project estimate at completion.
(You must show formula and breakdown). Bottom up EAC 2.5m + Actual cost (so far) 3.5 = 6 millions Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 8 of 27 Task 3: Project – Manage Cost within a Project
Objective Demonstrate the skills and knowledge to identify, analyse and refine
project costs to produce a budget, and to use this budget as the main
instrument to control project cost. Assessment
overview In this assessment, you will be determining project costs and budget
for a conference as Project Officer for ‘Manager Networks’, the case
study organisation for this assessment. You may choose another case
study, however, you must get approval from your Trainer.
In Part 1, you will be developing a cost management plan and
participating in a project meeting to discuss the project budget.
In Part 2, you will be monitoring and controlling project costs and
reporting on cost management issues.
In Part 3, you will be reflecting on what you have learned about
project cost control.
Your assessor will provide you with clear instructions before
commencing each part of the assessment. Resources
required The following documents are required for this project. You will find
these in Moodle assessment tab for this unit.
Part 1: Appendix 1 - Conference Plan Brief
Appendix 2 - Project Cost Management Plan Template Part 2: Appendix 4 - Conference Finances Report Template Assessment
conditions Assessment must be conducted in a safe environment where evidence
gathered demonstrates consistent performance of typical activities
experienced in the management and leadership – project
management field of work and include access to: workplace documentation, including budgets and other
financial documents case studies and, where possible, real situations. Reasonable
adjustment If you are unable to undertake the assessment task as designed,
please speak to your assessor. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 9 of 27 Note to Students – Assessment and Project Management Tools and Technology
It's strongly advised students use a Project Management Information System (PMIS). A PMIS is
typically a software management system used to calculate schedules, costs and expectations
and most PMIS will automate and control project management systems.
There are also a number of excel templates online to assist students in completing assessments.
PMIS software can normally assist in: WBS Creation
Gantt and scheduling activities
Earned Value Management controls
Resource levelling There are many off the shelf products, including Microsoft Project, as well as free open source
products like Project Libre.
More cloud-based solutions (projectmanager.com, Smartsheet.com) are available.
Discuss these options with your trainer. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 10 of 27 Part 1: Cost management plan
In your role of Project Manager for ‘Manager Networks’, you’re required to determine project
costs by researching and documenting the costs included in a Work Breakdown Structure (WBS).
You’ll then participate in a meeting with project stakeholders to seek input on costs. You will
also be required to develop a project cost management plan that includes a project budget.
Read the business case study below and follow the steps to complete Part 1. You must: Update the WBS and Gantt chart scheduling activities
Develop a project cost management plan
Develop cost/resource estimates and project budget
Participate in a project team meeting
Write an email to Regina the senior manager Case Study
You are the new project manager for ‘Manager Networks’, an organisation that provides
networking events for business people across Australia. The senior manager is Regina and her
contact email address is [email protected]
Although you have been given delegated authority to manage the costs and budget, you will
need to contact her with project updates.
The previous project manager was let go due to the fact that work was not being completed and
that they had mislead Richard Green the CEO/Owner. Very little of the project has been
completed. The venue hasn’t been booked, budgets and cost estimates are not completed.
The event co-ordinator is currently confirming speaker availability.
Initially the project had a 6-month timeline, due to the fact the conference is planned for 23rd
November 2018. You have a 12-week period from Monday 10th September 2018 including a
week to wrap up after the conference.
The company regularly runs networking events and decided to launch an annual conference
event for the first time, with a key focus on business leadership.
Most attendees are expected to be regular to Manage Network Events. Greystone College Australia: BSBPMG514 Assessment Version 3 0119 Page 11 of 27 CEO Richard Green, has asked that you do not use previous documentation not be used and
project be remodelled and reworked. He has supplied you with an extracted WBS and
incomplete Gantt chart and asks you to finalise scheduling before doing project cost
plan/budget and estimates. The proposed venue has not been confirmed, though was quoted at $45,000 for 2 days: Day 1 - set up
Day 2 - conference. In house catering is available for a minimum of $69 per head which includes breakfast, morning
tea lunch and afternoon tea. Marketing has secured the following sponsorship: Presenting Platinum Sponsor $100 000
2 Gold sponsors at $25 000
5 Silver sponsors at $9000
20 Bronze sponsors at $2000 They currently have 100 tentative company delegates attending at $1250 per head.
They also have 15 individual bookings at $1500 per head.
CEO Richard Green has requested that a ...
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- Three '17
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