120 likes | 487 Views
Common Sources of Project Cost. Labor cost:SkilledSemiskilledUnskilledIncludes salaries, hourly rates, overtime, health care etc.Material:Raw material, software
E N D
1. Project Cost Management 4th Knowledge Area of
PMBOK
2. Common Sources of Project Cost Labor cost:
Skilled
Semiskilled
Unskilled
Includes salaries, hourly rates, overtime, health care etc.
Material:
Raw material, software & operating systems etc.
Subcontractors:
Guess?
Equipment & Facilities:
Guess?
Travels:
Business travel (car rental, airfare, hotels, meals etc)
3. Direct & Indirect Cost Direct Cost:
Labor
Material & Machinery
It is easy to calculate
Indirect Cost:
Overhead Cost
Utilities, taxes, insurance, transportation of material, medical aid / facilities,
General Administration
Advertising, shipping, secretarial support etc
There are different ways to calculate indirect cost. Mostly organizations use a percentage of direct cost as indirect cost.
4. Other Costs Recurring Cost
Nonrecurring Cost
Fixed Cost
Variable Cost
Normal Cost
It is the project cost according to original, planned schedule agreed by all stakeholders at the beginning of the project.
Expedited Cost
This s the unplanned cost when steps are taken to speed up the project completion. What could be this cost?
5. Expedited Cost It is the unplanned cost incurred when steps are take to speed up the project completion.
If the project has fallen behind schedule and decision is made to “crash” certain activities to recover lost time. This is also called CRASHING. This can be done by giving overtime, employing more labor, outsourcing, incurring higher cost for logistic activities.
6. Problems with Cost Estimation Low Initial Estimates
Unexpected Technical Difficulties
Lack of Definition
Poor planning, initial scope definition etc
Specification Changes
External Factors
Shortage of raw material
Financial crisis
Inflation
New tax policy
Increase of indirect cost
7. Project Budget The project budget is a plan that identifies the allocated resources, the project goals and the schedule that allows the organization to achieve these goals.
Top-down Budgeting
Bottom-up Budgeting
Activity Based Costing:
Methods used
Analogous Estimates (estimates taken from previous such projects)
Parametric Estimates (square footage in construction)
Bottom-up estimates
Three point estimates
Reserve Analysis
Cost of Quality
8. Thank you, all Best of Luck for your Exams & Project!!!
Please visit my office from 11am Friday to check your third hourly paper and result