BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 1 Agenda. HR and Bus. program Estimates, costs, budgets, forecasts, variances and control Resource allocation and leveling Guest Speaker: Bob Stanley - Friday Scope control Monitoring and Control: Forms, Reporting Final Project in class group work - review docs submitted by Team Members

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 2 Learning Objectives Deciding which items to include when estimating cost Preparing a baseline budget Cumulating actual costs - don’t wait to the end Determining the Earned Value of work performed Analyzing cost performance Forecasting project cost at completion Controlling project costs Managing cash flow

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 3 Cost Planning Ch. 9, Gido and Clements Hygeia Travel Health, case p. 253 Note their criteria for project evaluation Raise revenue, cut costs, customer retention Costs are estimated first before the projects are approved - method contributes to their success The costs help establish a Baseline budget This helps them control during execution These pages include estimating methods:

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 4 RWD Technologies case. P. 266 Whose1 second =$100,000? Job training reduced to days from weeks ERP implementations -what is ERP? Web based applications for document management - give a personal example in class

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 5 Estimates (planning) costs, know these terms and methods Top down - executive and management driven/levels of accuracy: 1. Ball park (first time, rough) 2. Order of Magnitude (historical, analogous - accurate) 3. Phased (unsure of future development) Bottom up - Team members and Supervisors: from the WBS 4. Parametric estimates (know individual prices, accurate) 5. Detailed (team member, accurate) Iteration is the process of used to reconcile differences between management and others

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 6 Top down vs. bottom up - estimating Top down + Top down - Bottom up + Bottom up -

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 7 Monitoring & controlling costs, & checking for “variances” Monitor - check cumulative amount spent at any time point - do planned checks. Compare (analyze) above to the budgeted amounts, baselines. Select methods. E.g. CV, CPI Control - correct and reforecast final $ Communicate changes

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 8 Methods of analysis. Manual or computerized Earned Value. Budgeted cost x % of completion Cost Performance indicator (CPI)% EV/AC (Actual Cost) Cost Variance CV = EV-Actual Cost Schedule Variance SV, above can be used to calculate time as or $

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 9 Applied learning - calculate. Use Student Loan? Use text book format, p. 262 on Collect data Total budget amount Cumulative budget amount Cumulative actual spent Earned value. % of completion to budget % Earned value $ Cost Performance CPI % Cost variance $ Book $ % $ % $ +/- Your loan $ % $ % $+/-

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 10 MS Project - forms related to the lecture Resource sheet Cost table and graphs Work tasks and package costs Summaries Reports Cash flow Cost Variance Earned value Use handout for links

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 11 Review questions - this week’s lecture Pros and cons of Top Down vs. Bottom up est. Calculate Earned Value? Why draw graphs of actual results? Describe relationship of estimate to WBS Describe: baseline, budgets, cost estimates, forecasts, cash flow Understand “cumulative” e.g. estimates/baseline How would you get back on budget? Which work packages would you focus on?

BUS 4017 Project Mgt. Wk. 9 Prof.essor Fred Pentney 12 Home assignment: Work with Group. Next week hand into your Project Manager: Your estimates for all your work packages- time and materials from all sources on a MS Project form or XL Submit other specified documents as per your Project Manager - discuss 2 marks for above if PM approves