Ch07 - Chapter7 FourthEdition LearningObjectives Understand the importance of project cost management Explain basic project cost management

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Chapter 7: Project Cost Management Information Technology Project Management, Fourth Edition
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2 Information Technology Project Management, Fourth Edition Learning Objectives Understand the importance of project cost management. Explain basic project cost management principles, concepts, and terms. Discuss different types of cost estimates and methods for preparing them.
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3 Information Technology Project Management, Fourth Edition Learning Objectives Understand the processes involved in cost budgeting and preparing a cost estimate and budget for an information technology project. Understand the benefits of earned value management and project portfolio management to assist in cost control. Describe how project management software can assist in project cost management.
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4 Information Technology Project Management, Fourth Edition The Importance of Project Cost  Management IT projects have a poor track record for meeting budget goals. The 2003 CHAOS studies showed the average cost overrun (the additional percentage or dollar amount by which actual costs exceed estimates) was 43 percent. U.S. lost $55 billion in IT projects in 2002 from cancelled projects and overruns compared to $140 billion in 1994.* *The Standish Group, “Latest Standish Group CHAOS Report Shows Project Success Rates Have Improved by 50%,” A Standish Group Research Note (3/25/03).
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5 Information Technology Project Management, Fourth Edition What Went Wrong? According to the San Francisco Chronicle’s front-page story, “Computer Bumbling Costs the State $1 Billion,” the state of California had a series of expensive IT project failures in the late 1990s, costing taxpayers nearly $1 billion…It was ironic that the state that was leading in the creation of computers was also the state most behind in using computer technology to improve its services.* The Internal Revenue Service (IRS) managed a series of project failures that cost taxpayers over $50 billion a year—roughly as much money as the annual net profit of the entire computer industry.** Connecticut General Life Insurance Co. sued PeopleSoft over an aborted installation of a finance system.*** *Lucas, Greg, “Computer Bumbling Costs the State $1 Billion,” San Francisco Chronicle (2/21/99). **James, Geoffrey, “IT Fiascoes . . . and How to Avoid Them,” Datamation (November 1997). ***Songini, Marc L., “PeopleSoft project ends in court,” ComputerWorld (September 2001).
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6 Information Technology Project Management, Fourth Edition What is Cost and Project Cost  Management? Cost is a resource sacrificed or foregone to achieve a specific objective, or something given up in exchange. Costs are usually measured in monetary units, such as
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This note was uploaded on 12/17/2010 for the course TECHNOLOGY CSC420 taught by Professor Na during the Spring '10 term at Sullivan.

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Ch07 - Chapter7 FourthEdition LearningObjectives Understand the importance of project cost management Explain basic project cost management

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