Discuss about the Cost Estimation Technique And Management.
This cost estimation technique is based on estimation of cost based on three techniques such as parametric estimates, analogous estimates and three-point estimate. Parametric estimate is used for estimation of cost of product and project. The results of model is obtained for approval to be proceed. Analogous estimate is compared with the past similar project towards the current project. The cost is estimated based on historical data for the subsystem (Eldenburg et al., 2016). Three point estimation is represented of outcome for the future events which is based on limited information. The total budget of the project is $86,572.85 with human resources budget as $81,696, office suppliers as $274.33 and transport as $480.00. Cost management plan” href=”https://#”>Cost management plan is a process which helps Internetional Inc. to plan as well as control of the business budget. It is considered as management accounting which allows the business for predction of the expenditures that hep to reduce the chance over the budget (Goetsch & Davis, 2014). The quality management plan is defined as the acceptable level of the project quality, that is defined by the customers. By measuring the quality of the product, the project ensures that the level of quality into the project deliverables as well as work processes should be better. The plan ensures that the work processes are to be performed efficienctly along with documented.
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Project Title: |
IC Client project |
Date Prepared: |
26th june 2018 |
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Parametric Estimates |
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WBS ID |
Cost Variable |
Cost per Unit |
Number of Units |
Cost Estimate |
|
IC0001 |
Human Resources (Primary) |
$ 81,696.00 |
NA |
$ 81,696.00 |
|
IC0002 |
Human resources (Contingency) |
$4,084.80 |
NA |
$4,084.80 |
|
IC0003 |
Office supplies (Primary) |
$274.33 |
NA |
$274.33 |
|
IC0004 |
Office Supplies (Contingency) ontingency |
$13.72 |
NA |
$13.72 |
|
IC0005 |
Transport (Primary) |
$480.00 |
NA |
$480.00 |
|
IC0006 |
Transport (Contingency) |
$24.00 |
NA |
$24.00 |
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Analogous Estimates |
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|
WBS ID |
Previous Activity |
Previous Cost |
Current Activity |
Multiplier |
Cost Estimate |
|
IC0007 |
Start story draft using template |
$1581.12 |
Start story draft using template |
1.1 |
$17,39.23 |
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IC0008 |
Research client company |
$8672.00 |
Research client company |
0.9 |
$7,804.80 |
|
IC0009 |
Create ‘due diligence’ rough draft |
$3,016.17 |
Create ‘due diligence’ rough draft |
1 |
$3,016.17 |
|
IC0010 |
Coordinate needs proposal with client |
$4,783.00 |
Coordinate needs proposal with client |
1 |
$4,783.00 |
|
IC0011 |
Estimate future demand and cashflows |
$3,876.91 |
Estimate future demand and cashflows |
1.2 |
$4,652.29 |
|
IC0012 |
Draft future plans for client company |
$8,856.90 |
Draft future plans for client company |
1 |
$8,856.90 |
|
IC0013 |
Create and approve legal documents |
$7,153.00 |
Create and approve legal documents |
1.3 |
$9,298.90 |
|
IC0014 |
Integrate all drafts into first-draft proposal |
$5,987.00 |
Integrate all drafts into first-draft proposal |
1 |
$5987.00 |
|
IC0015 |
Line up potential sources of capital |
$16,985.00 |
Line up potential sources of capital |
1.2 |
$20,382.00 |
|
IC0016 |
Check, approve and print final legal proposal |
$8,100.00 |
Check, approve and print final legal proposal |
1.1 |
$8,910.00 |
|
IC0017 |
Sign contracts and transfer funds |
$5,542.00 |
Sign contracts and transfer funds |
1 |
$5,542.00 |
|
Three Point Estimates |
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|
WBS ID |
Optimistic Cost (a) |
Most Likely Cost(m) |
Pessimistic Cost (b) |
Weighting Equation |
Expected Cost Estimate |
|
IC0007 |
$993.84 |
$1,739.23 |
$2,484.61 |
(a+4m+b)/6 |
$1,739.23 |
|
IC0008 |
$3,902.40 0 |
$7,804.80 |
$15,609.60 |
(a+4m+b)/6 |
$8,455.20 |
|
IC0009 |
$1,206.46 |
$3,016.17 |
$4,825.87 |
(a+4m+b)/6 |
$3,016.17 |
|
IC0010 |
$4,027.78 |
$4,783.00 |
$7,048.63 |
(a+4m+b)/6 |
$5,034.73 |
|
IC0011 |
$3,101.52 |
$4,652.29 |
$12,406.11 |
(a+4m+b)/6 |
$5,686.13 |
|
IC0012 |
$1,265.27 |
$8,856.90 |
$16,448.52 |
(a+4m+b)/6 |
$8,856.90 |
|
IC0013 |
$3,719.56 |
$9,298.90 |
$26,036.92 |
(a+4m+b)/6 |
$11,158.68 |
|
IC0014 |
$2,394.80 |
$5,987.00 |
$16,763.60 |
(a+4m+b)/6 |
$7,184.40 |
|
IC0015 |
$12,738.75 |
$20,382.00 |
$43,311.75 |
(a+4m+b)/6 |
(a+4m+b)/6 $22,929.75 |
|
IC0016 |
$3,564.00 |
$8,910.00 |
$14,256.00 |
(a+4m+b)/6 |
$8,910.00 |
|
IC0017 |
$3,248.75 |
$5,542.00 |
$8,599.65 |
(a+4m+b)/6 |
$5,669.4 |
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Level of Accuracy: |
Units of Measure: |
Control Thresholds: |
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The accuracy of the project is 50-100%. |
Estimation of duration of each activity, amount of work accomplished by the project resources |
Bottom-up project control is used at lower level of WBS |
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Rules for Performance Measurement: |
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Specification of tracking methodologies Earned value management to calculate projected estimate at project completion (Kerzner & Kerzner, 2017) Validity check for the bottom up earned value calculation |
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Cost Reporting and Format: |
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Cost control reporting: It is consisted of earned workhour report, labor cost report and project cost report. The main purpose of this report is to compare of actual expenditures to budgeted costs by cost code which is being established by company (Lee, Kim, & Yu, 2014). Budget plan report: It consists of the total budget required to complete it on time. It is consisted of estimated and intended expenditures for provided period for the financial purposes. Monthly cost reporting: The financial manager estimates the total budget cost for each of the project activities on monthly basis (Ross, 2017). |
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Process Management: |
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Estimating costs |
The techniques which is used to estimate the cost of project is detailed into the project as: Analogous estimation: The cost is estimated by making comparision of the project which is being previously completed by the organization (Ruijs et al., 2017). Parametric estimation: It is used of historical data for calculation of the estimation. It is taking of variables from similar projects to the current project. Three point estimation: This particular technique is used for reduction of the uncertainties to estimate the assumptions (Snyder, 2013). Bottom up estimation: It is accurate, time consuming along with costly to estimate the project cost. |
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Developing the budget |
Identification of goals of the buisnes such as includes of business plan Review project documents and business documenmts such as income statement, balance sheet, assets, projection of cash flow and past tax returns Breaking down the project activities into annual tangible amount of cost (Stark, 2015). Creation of the final budget plan |
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Updating, monitoring and controlling |
Earned value management Budget forecasting Cost review based on business performance Reserve analysis Project management software |
Quality Rolesand Responsibilities
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Role |
Responsibilities |
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|
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Project deliverables: There are deliverablesfor each main activity of the project, therefore the deliverables are being idenfified into the project definition. Correctness: Each of the project delivderables are completed and correceted. At the fist time, approval are taken for the project deliverables. Quality standards: There are quality control activities which are required by the organization. It is possible that the project team is developed towards certain standards. Quality tools: It is included of quality assurance to be focused on entire quality (Kerzner & Kerzner, 2017). Quality control activities: Each of the project deliverables are identified, and desctribed the quality of project activities to make sure about the project deliverables to meet with quality expectations. |
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There is required to develop of stakeholder’s expactations and quality standards. Those are developed for project inputs, processes and outputs.There are innovative approaches towards the quality assurance of the project management. The quality assurance approach is illustrated using quality triangle such as defining quality, measuring quality and improving quality. The quality dimensions are technical performance, effectiveness of quality standards, efficiency of the service delivery and safety along with continuity of services (Snyder, 2013). The quality approach is measured, then the scope measurement is being limited. Quality measures are required to identify the accuracy of project. |
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Quality Control Approach |
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It is concerned on operational activities, and techniques which are required to fulfill with the quality requirements. It is considered as product based approach, to meet with the quality requirements. The quality control measures are based on the product as well as services. Quality control prevents the customers from defective products and also the company which damages the reputation of the manufacturing processes. The testing process reveals the issues with the product, then the inmpscetor has to fixed the problems (Ross, 2017). When issues are raised into the product, then the quality inpscetor inspects the product and takes of possible steps to mitigate it. |
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It is considered as an approach for analyzing the efforts as well as performance of the project for making of possible improvements. The quality improvement approaches are used to collect as well as analyze the data along with test the possible changes. The approaches of quality improvement are system focused, teamwork, peer review valued and errors which are seen for learning. Model for improvement is a quality approach is used of rapid cycle proceses such as plan do study act cycle for testing the efforts for making of small changes (Ruijs et al., 2017). They are intrioduced of test changes for achieving the improvement using PDCA cycles. |
Conclusion
It is concluded that cost estiate is approximation of the cost of the project with single value and have identifiable component values. It is consireded as approximation of the preduction of the money which is required to complete the project plan. It is required to estimate the cost that helps to assess that the project is feasible and back to the fund. It is concluded that the cost management of the business is concerned with process to plan and control of the budget. It is included of activities such as plan, estimate, budget, finance and manage and control of the cost such that the project is completed with the total budget. It is concluded that process to identify the quality standads are relevant to project as well as determine how to satisfy the customers. Quality planning is the plan to fulfill with the process as well as product quality needs. This plan is considered as internal document that can organize, plan as well as implement of quality activities.
References
Eldenburg, L. G., Wolcott, S. K., Chen, L. H., & Cook, G. (2016). Cost management: Measuring, monitoring, and motivating performance. Wiley Global Education.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Lee, S. K., Kim, K. R., & Yu, J. H. (2014). BIM and ontology-based approach for building cost estimation. Automation in Construction, 41, 96-105.
Ross, J. E. (2017). Total quality management: Text, cases, and readings. Routledge.
Ruijs, A., Kortelainen, M., Wossink, A., Schulp, C. J. E., & Alkemade, R. (2017). Opportunity cost estimation of ecosystem services. Environmental and Resource Economics, 66(4), 717-747.
Snyder, C. S. (2013). A project manager’s book of forms: A companion to the PMBOK guide (2nd ed.). Indianapolis, IN: Wiley Publishing.
Stark, J. (2015). Product lifecycle management. In Product Lifecycle Management (Volume 1) (pp. 1-29). Springer, Cham.
Woodhouse, D., Bale, M., Palmer, S., & Tocher, W. (2016, May). An evolution in cost effective power utility grounding asset management: Plan, design, build, assess & operate. In Transmission and Distribution Conference and Exposition (T&D), 2016 IEEE/PES (pp. 1-5). IEEE.
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