PM4_10FEB10 - Chapter 1 ProjectBudget ,which Establi

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Chapter  Planning to Minimize Cost
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
    2 Project Budget The budget is an important communication link between the  functional units and the project Should be presented in terms of measurable outputs, which  correspond to work packages in the WBS  Should clearly indicate project milestones  Establishes goals, schedules and benchmarks, and assigns  resources to tasks Serves as a baseline for progress monitoring and control
Image of page 2
    3 Types of Budgeting Top-down Budgeting:   Aggregate measures (cost, time) provided  by top management, based on strategic goals and constraints Bottom-up Budgeting:   Specific measures aggregated up from  WBS tasks/costs and subcontractors Hybrid:  Top management typically indicates a budget constraint,  while project managers use a bottom-up approach to estimate  individual costs
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
    4 Types of Costs in Projects Direct costs : resource costs, including expediting costs. These vary with task  duration. Material costs : reflect the cost of acquiring materials needed to complete  work. These vary with project scope. Overhead costs : administrative costs allocated to support the project, and  usually not attributable to any specific task. These vary with project  duration. Performance costs / bonuses : vary with project duration, or sometimes with  performance relative to milestones, depending on the contract.
Image of page 4
    5 Project Budget Example Ta sk A 14 w k s Ta sk D 12 w k s Ta sk E 6 w k s Ta sk B 9 w k s Ta sk C 20 w k s Ta sk F 9 w k s START END ES F = 26 LF F = 35 ES D = 14 LF D = 26 ES START = 0 LF START = 0 ES A = 0 LF A = 14 ES B = 0 LF B = 14 ES END = 35 LF END = 35 ES C = 0 LF C = 29 ES E = 26 LF E = 35
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
    6 Project Budget Example Cost for Resource A worker = $400/week Cost for Resource B worker = $600/week
Image of page 6
    7 Project Budget Example  Early Start Times Task 1 2 3 4 5 6 7
Image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern