Cost Performance on Project S Often Poor, What Are the Possible Causes of This and How Can It Be Improved?

592 Week 1 DQ 1 WBS Construction PROJ 592 Week 1 DQ 2 Project Cost Estimates and Assumptions PROJ 592 Week 2 DQ 1 Cost Components PROJ 592 Week 2 DQ 2 Estimating Processes PROJ 592 Week 3 DQ 1 Project Schedules PROJ 592 Week 3 DQ 2 Sensitivity Analysis PROJ 592 Week 4 DQ 1 Resource Allocation and Leveling PROJ 592 Week 4 DQ 2 Advanced Schedule Techniques PROJ 592 Week 5 DQ 1 Earned Value Calculation PROJ 592 Week 5 DQ 2 Project Monitoring and Control & EV PROJ 592 Week 6 DQ 1 Forecasting Project Completion Cost PROJ 592 Week 6 DQ 2 Project Control PROJ 592

The cost, team size and LOC are measured on the bases of COCOMO model. It is a constructive cost mode. Effort of the project is calculated by the help of algorithm models. One of these models which are widely used is COCOMO model. For the cost estimation of any project, COCOMO (constructive cost model) is used. This model was developed by Boehm in 1981. There are three versions of the COCOMO which are listed below:

After setting the entire project to 40% complete on Oct 1, 2008 we can see that the project is behind schedule. The schedule variance of the entire project is $ (736,599) and Schedule performance index is at 0.68, which indicates that for every $1.00 spent in the project we are only getting $0.68 worth of work done. Since we do not have actual cost data, the MS Project calculates the budget is under budget by a negligible $80.

* The final significant risk my firm identified is the possibility of not meeting the established budget ceiling of $320,000. There are many variables which we feel could cause the cost of build to exceed the budget. Some of those variables include having to pay a premium for in-demand subcontractors, the cost of buying and

2) An organization's budget estimating process routinely misses the actual cost of a project by 25%. For the most recent project, the budget variance was a ridiculous 23%, but this must be considered common cause variance.

We used PV (planned Value), AC (actual cost), and EV (earned value) to calculate SPI (schedule performance index), SV (schedule variance), CPI (cost performance index), and CV (cost variance). Among these indicators, SPI and SV show whether a project is behind schedule or not, and CPI and CV indicate whether a project is under budget. Therefore, the statuses of the schedule and cost of technical infrastructure, software customization, and combined projects can be easily and clearly checked, respectively.

Cost controlling means amending the cost of project by monitoring project status and controlling variation of the cost base line. From this case, I found that some methods were done for the cost change. The methods are list as following:

I was also, surprised when we created the first cost with no any supporting documents of the how we got to that figure. Based on my personal life experience and after working for a long time, I understand by experience that I can come up with a closer budget to any similar project that I had already executed in the past. It is also true that we use some techniques through which we can calculate the resources for the similar projects. Unfortunately, in our current environment, it is not the case. Do you remember when we are executing the job and repeating for several times? It is normal we come up to the point that we can manage the next similar project effortlessly.

Essentially, with the current cost system, the managerial analysis is highly flawed due to a lack of crucial in-depth cost information, as indicated by:

Essentially, with the current cost system, the managerial analysis is highly flawed due to a lack of crucial in-depth cost information, as indicated by:

In field of project management, there are a plethora of mechanisms under perpetual reevaluation. One specific segmentation of project management under such scrutiny pertains to cost duration, which is the time and monetary costs of completing individual tasks within the project’s critical path (IBM Knowledge Center, 2016). The process of monitoring and evaluating the time and financial impacts of each task is referred to as cost duration analysis (IBM Knowledge Center, 2016). A chief concern of cost duration analysis is identifying tasks within the project’s critical path which can reduce project duration (PMI, 2013). A common approach to reducing a project’s duration is task “crashing” (PMI, p.181). According to The Project Management Institute (2013) crashing refers to the process of methodical determining the financial value of increasing a critical path task’s resources in order to decrease project duration (p.181).

ABI is using a top-down process in this project, meaning that determination of the final budget comes almost strictly from a compilation of experiences and judgments of the top and mid-level managers in the company. The higher-level managers break down costs into major categories, pass down their cost estimates to the next lowest level, lower-level managers break the major categories down into subcategories and so on until the estimation process reaches the lowest level of the company. By the end, each level knows the specific amount of money that it is allotted to complete the project tasks required at that level. Because the project is so extensive in price and risk, it would have been smarter for them use a bottom-up process which would have involved the employees who would actually be part of the work team so that management could get a more accurate estimate of the time and money that would be required to complete the project.

Project Cost Management – controlling the cost of the project, which includes estimating, budgeting, financing, funding, and managing costs of each task.

Project management is not only useful in the working environment, but it could also become great skills that can be used for all life projects that we do through out our life.

According to an accounting textbook, cost is defined as a resource sacrificed or foregone to achieve a specific objective. It is something given up in exchange. It is necessary for project managers to understand project cost management since project costs money and consumes resources.