Project Cost Management

 

Part 4: Project Cost Management

The project sponsor has asked the team to refine the cost estimate for the project so that a solid cost baseline exists for evaluating project performance. Recall that your goals are to complete the project in five months or less for under $400,000. You mistakenly thought that travel costs would not need to come out of your $400,000 budget. You now realize that travel costs must be included in the budget. The trip to England will cost $6,000, which you had not expected.

An outside contractor will assemble the sensor circuits for the system. Your team will design the hardware circuit and the printed circuit board (PCB). The outside contractor will manufacture the PCB and solder the components onto the board. The cost for this service is estimated at $5,000. Additional hardware costs for the IoT appliance are estimated at $2,000. Hans and Gretta are responsible for procuring the computer hardware required. They will also install the system in preparation for the field trials.

As project manager, your salary is $100/hour. All the other team members have a salary of $80/hour.

 

Part 4 Tasks:

 

  1. Enter the human resources into MS Project along with their salaries.
  1. Assign the resources to tasks. Make sure none of the resources are over-allocated.
  2. Use the “Cost Table” in MS Project to enter the cost of the trip, the cost to manufacture the sensors, and the computer hardware costs. Save the file with the cost table open.
  1. Assume that you have completed two months of the project and have actual

data. The BAC was $400,000 for this five-month project. Also assume the following:

 

PV  $160,000

EV $150,000

AC $180,000

Using this information, write a short report that answers the following questions:

  1. What is the cost variance, schedule variance, cost performance index

(CPI), and schedule performance index (SPI) for the project?

  1. Use the CPI to calculate the estimate at completion (EAC) for this

project. Use the SPI to estimate how long it will take to finish this project. Write a paragraph that explains the meaning of the results of the calculations.

  1. How is the project doing? Is it ahead of schedule or behind schedule? Is it under budget or over budget? Should you alert your sponsor and ask for assistance?

 

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