Project Cost Estimates

In order to organize the work involved in a project we have created a Work Breakdown Structure (WBS). A WBS allows us to divide the work by tasks and subtasks in to smaller pieces and helps us plan and manage the project schedules, costs, resources, and changes. It will also allow us to monitor our project progress and give us an idea on where we are at different intervals of the project. We will use a milestone report, as listed in Figure #3, to help monitor this progress.

It is important to note that the WBS defines the entire scope of the project therefore it is crucial that the WBS covers all the work involved in the project appropriately. A Gantt chart, as shown in Figure #4, will help give a complete picture of the project phases and subtasks as listed on the WBS, and will show time estimate figures for our CVS supply chain module implementation project. We will be able to plan, coordinate, and track specific areas of the project more easily. We will also use a network diagram, as listed in Figure #4, which displays the logical relationship amount the project activities.

This diagram is very useful at it

Need essay sample on "Project Cost Estimates"? We will write a custom essay sample specifically for you for only \$ 13.90/page

lists all the activities that must be done to complete the project. Last, but not least we will also perform a Program Evaluation and Review Technique (PERT) Analysis, as shown in Appendix B, in order to help us in determining how one task falling behind schedule may affect other tasks. This analysis is used to estimate project durations based on optimistic, most likely, and pessimistic of activity durations. The PERT analysis will help make estimates that are more realistic.

Below is the formula that was used to come up with the estimates: Critical Path After adding the details of each task i. e. duration, resources, and predecessors, we can find the critical path of the project. In layman’s language, a task is on a critical path, if any delay in starting or completing the task will delay the project itself. Technically, if a task has zero slack value, then it is on the critical path. Understanding what tasks are on critical path is the most important step to ensure that a project is completed on time.

Once you are aware of the tasks that are on critical path, and the ones that are not, it helps you to understand which tasks are on priority list and in case required where the resources could be diverted to help them complete on time. Assume that you are currently working on two tasks – one that is on critical path and another which is not. If for some reason, there is only one resource to complete the task, or the one on critical path requires more resources, then the non-critical task can be put on hold and all resources utilized to complete the critical task.

However, it is required to keep checking for critical path whenever a change is made since it can change the critical path as well. For this project, the tasks are sequential and are executed one after the other i. e. there is a single path for the entire project. Hence, all the tasks are on critical path. This means the project manager needs to ensure that each and every task in the project is completed on time to ensure project completion on time. Resource Constraints The project utilizes 25 resources including the project manager.

Resources are assigned to each task based on the project organizational chart and responsibility assignment matrix. The project takes more than 600 days to complete which is approximately 20 months. Adding more resources would help reduce the timeline but at the same time it would increase the costs especially if more senior members are chosen. In case junior members are chosen then the quality may suffer or it may require additional checks by senior members leading to more costs/more time to complete the activity.

However, adding more resources also means increase in communication lines that could lead to complications. In this project, the project initiation and planning phases require a lot of time effort by the project manager – adding an assistant project manager could help reduce the workload. Also, the project design phase duration could be reduced with the addition of more senior members. However, in spite of adding more resources, an activity’s duration cannot be reduced beyond a point. SCM Software Coding and Debugging are some of the highly uncertain activities.

It is important to understand the critical path of a project and equally important to check for any changes to the critical path as changes are made to the project plan. Adding another resource to an activity does not necessarily reduce the activity duration to half but requires consideration of time lost in communication. Also, an activity duration has a minimum duration that cannot be reduced further even with the addition of more resources. This section presents the cost estimate for the SCM. Project cost estimating is “developing an approximation or estimate of the cost of the resources needed to complete the project” (Schwalbe, 2008, p.

301). Reliable cost estimates are important in preparing budgets, planning, and effective use of resources (Project Development Cost…, 2007, p. 3). The cost estimate for the SCM is done using the bottom-up estimate technique. It is done by determining resources needed to complete the project and then assigning the resources to each activity on the WBS and summing them to get the project total cost (Schwalbe, 2008, p. 274). The resources used for the cost estimate represent the project team members; the resource cost for the module implementation is represented by labor rates.

The labor rates used in this project are: project manager’s labor rate is \$90/hour; organizational unit leaders’ rate is \$80/hour; and other team members’ labor rates are between \$65 and \$76. The overtime compensation is based on the 20% rate and rounded to the nearest dollar. Resources are assigned to each task based on the project organizational chart and responsibility assignment matrix. The cost estimate is broken down by summary task and done using Microsoft Project 2007. Each figure below contains the total duration and total cost for a corresponding summary task.

Based on the cost estimate, the SCM module implementation will take 614 days to complete, which is about 20 month. The total cost for the SCM module implementation is \$1,800,304. According to the figure #5 below, the project initiation stage will take 84 days and cost \$111,680 to complete. This stage is scheduled to start on June 2, 2008 and finish on September 25, 2008. As demonstrated by the figure #6 below, the project planning stage will take 104 days and cost \$264,720. It will begin on September 26, 2008 and finish on February 18, 2009. The project design stage is the longest and most expensive stage of the SCM module roll out.

It will take 197 days and cost \$738,328 to complete. This stage will start on February 19, 2009 and finish on November 10, 2009. According to the figure #7, the project implementation stage will take 139 days and \$455,968. It is scheduled to start on November 10, 2009 and finish on May 24, 2010. Next, the project testing stage will take 89 days and \$216,496. It will last from May 24, 2010 to September 24, 2010. And finally, as demonstrated by the figure #8, the project closing stage will take only 7 day and \$13,112. The project closing will last from September 24, 2010 to October 5, 2010.

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Service Open At All Times
|