can not be traced back to any single project or work package eg utilities rent

Can not be traced back to any single project or work

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can not be traced back to any single project or work package (e.g. utilities, rent, procurement department, software licenses, security, workers compensation, etc.). Sometimes broken into specific amortized costs. May be included in labour rates for internal resources and thus included in Direct Costs. Contingency – i.e. funds for the unknown work (e.g. activities taking longer than planned, issues, etc.). Not for new scope. Can be further broken into Management Reserve (for “unknown unknowns”) and Project Contingency (for “known unknowns”). Project Cost Estimate © Elemental Projects 2016
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PMGT5871 Project Process Planning & Control Topic 5 Topic 5 5 The University of Sydney Page 9 Cost breakdown 9 Bid Price Project Cost Estimate Direct Costs (“Project Budget”) Project Contingency Cost Baseline / BAC Control Account 1 Control Account 2 Work Package Contingency Work Package Cost Estimates Activity Cost Estimates Activity Contingency Control Account 3 Management Reserve Indirect Cost Overhead Amortized Costs e.g. marketing e.g. R&D e.g. fines/ settlements Profit Cost of bid project Bid = quote, proposal, tender response BAC = Budget at Completion R&D = Research & Development Time-Phased Budget Cash-Flow © Elemental Projects 2016 The University of Sydney Page 10 Cost breakdown 1 0 Bid Price Project Cost Estimate Direct Cost Contingency Cost Baseline / BAC Control Account 1 Control Account 2 Contingency Work Package Cost Estimates Activity Cost Estimates Activity Contingency Control Account 3 Contingency / Management Reserve Indirect Cost Overhead Amortized Costs e.g. marketing e.g. R&D e.g. fines/ settlements Profit Cost of bid project Bid = quote, proposal, tender response BAC = Budget at Completion R&D = Research & Development Time-Phased Budget Cash-Flow
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PMGT5871 Project Process Planning & Control Topic 5 Topic 5 6 The University of Sydney Page 11 Example Cost Baseline The University of Sydney Page 12 Example Cost Baseline
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PMGT5871 Project Process Planning & Control Topic 5 Topic 5 7 The University of Sydney Page 13 Project Cost Estimate WBS Funding Source Labour Goods/materials Sub-total Planning Control Account 1 $50,000 $4,000 $54,000 Phase 1 pilot Control Account 2 $30,000 $25,000 $55,000 Phase 2 rollout Control Account 2 $380,000 $120,000 $500,000 Phase 3 handover Control Account 2 $20,000 $2,000 $22,000 Closure Control Account 3 $5,000 $500 $5,500 Total direct cost: $636,500 Cost type Cost Project Cost Estimate Direct Cost $636,500 $827,450 Indirect Cost (e.g.10% direct cost) $63,650 Contingency (e.g. 20% direct cost) $127,300 Cost Baseline (Direct Costs) © Elemental Projects 2016 The University of Sydney Page 14 Accuracy of project cost estimates Rough Order of Magnitude (ROM): -25% +75% Preliminary (Analogous): -15% +50% Budgetary Estimate: -10% +25% Definitive: -5% +10% Final
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PMGT5871 Project Process Planning & Control Topic 5 Topic 5 8 The University of Sydney Page 15 Techniques for estimating direct cost (may also be used to estimate duration) Top-down = guess Analogous = similar past project, adjusted for current circumstances Incremental = similar past project, adjusted for CPI Parametric = unit value x number of units
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