PM4_10FEB10 - Chapter 1 ProjectBudget ,which Establi

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1 Chapter  Planning to Minimize Cost
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    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
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    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
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    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.
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    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
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    6 Project Budget Example Cost for Resource A worker = $400/week Cost for Resource B worker = $600/week
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    7 Project Budget Example  Early Start Times Task 1 2 3 4 5 6 7 8 9 10 11 12
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This note was uploaded on 12/20/2010 for the course IEOR E4510 taught by Professor Mosherosenwein during the Spring '10 term at Columbia.

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PM4_10FEB10 - Chapter 1 ProjectBudget ,which Establi

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