30 Oct What benefits do budgeting processes bring to projects, and what weaknesses do they possess? [Your post must be substantive and demonstrate insight gained from the course material. Posti
Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.
Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.
Also, provide a graduate-level response to each of the following questions:
- What benefits do budgeting processes bring to projects, and what weaknesses do they possess?
[Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student's own words – do not provide quotes!]
[Your initial post should be at least 150+ words and in APA format (including Times New Roman with font size 12 and double spaced).
Book:
Watt, A. (2019). Project Management, 2nd Edition. BCcampus Open Education. Retrieved from https://opentextbc.ca/projectmanagement/
Budget Planning
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
1
Budget Management
Importance
Estimating costs to compare and select
Methods of Estimating
Managing the Budget
Budget timeline
Budget variances
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Importance of budget planning
Cost is one of the three project constraints
A budget is a plan or forecast
Cost management also includes tracking and managing variances from the planned expenditures
Detailed estimates are important
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Estimating costs to compare and select projects
Payback, rate of return or NPV (or combine them)
Need accurate numbers but must balance with the cost of getting more accurate estimates
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Estimating methods
Analogous estimate
Find a similar project or task and assume this one will be the same or similar
The more experience the estimator has, the better this works
Learn from each project
DPCI (Darnell-Preston Complexity Index) can help with benchmarking
Parametric estimate
Parameters such as number of square feet for a building; number of kitchens, bathrooms, etc. for a house.
Bottom-up estimating
Estimate each item or task and add them together
Generally more accurate but takes more effort to create
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Estimating Guidelines
Don’t gold-plate: estimate what you expect, and meet that estimate.
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Managing the Budget
Cash flow
Make a plan of WHEN the outflows will occur, and ensure that the money is available on time
Contingency reserves
For unexpected expenses that arise during the project
There are almost always some surprises, but can’t predict at the start what it will be
Project Manager does not allocate to the sub-projects but manages it centrally
Can be spent and still be within the original project budget
Management Reserves
For scope changes
Not likely to be spent; not part of project baseline
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Reporting Progress: Earned value management
| Budgeted Cost of work Scheduled | BCWS | Detailed estimates for each activity in the project |
| Planned Value | PV | Total budgeted cost as of a certain date in the project |
| Earned Value | EV | Budgeted cost of the completed work as of a certain date in the project |
| Actual Cost | AC | Actual cost of the completed work as of a certain date in the project |
| Budget at Completion | BAC | Total budgeted costs for the entire project |
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Project Cost Chart
BAC
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Budget Baseline February March April May June July 10000 12000 22000 30000 40000 45000
Budget Baseline and Project Cost Chart
The project budget is usually shown graphically, illustrating the cumulative planned spending.
Typical shape for the budget curve is s-shaped, with less spending at the beginning and end of the project.
Add the periodic expenditures on a regular basis to create the Project Cost Chart.
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Project Cost Chart (up to May)
BAC
AC
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Actual Expenditures February March April May June July 5000 7000 30000 35000 Bud get Baseline February March April May June July 10000 12000 22000 30000 40000 45000
Schedule Variance: SV
Difference between planned and actual progress
SV=EV-PV
Positive value: project is ahead of schedule
Zero: project is on-time
Negative: project is behind schedule
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Cost Variance: CV
The difference between the earned value and the actual cost is the cost variance:
CV=EV-AC
If positive, you are achieving more than you predicted for the money
If zero, you are right on the plan
If negative, you are achieving less than you predicted for the money
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Schedule Performance Index: SPI
Compares progress on the scope to spending:
SPI = EV/PV
SPI less than one indicates the project is behind schedule
SPI of one is right on schedule
SPI greater than one the project is ahead of schedule
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Cost Performance Index: CPI
Compares the budget spent to date with progress to date:
CPI=EV/AC
A value greater than one: under budget
Equal to one: on budget
Less than one: overspending the budget
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Estimated Cost to Complete the Project: ETC
Formula to use depends on what the PM expects with regard to future project costs and whether the original budget assumptions remain valid
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
ETC if past variances are not expected to continue:
ETC = BAC – EV
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
ETC if past variances are expected to continue at the same level
ETC = (BAC – EV)/CPI
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Estimated Final Project Cost: EAC
EAC = ETC + AC
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Budget Timeline
Contractual agreements often require partial payments
Prepare a schedule, based on contractual and other expenditure requirements
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Budget Management Summary
Cost estimations may be used to choose between options
Managing the budget includes
Estimating costs and setting a budget
Determining when the budgeted costs should occur
Tracking expenditures
Managing variances between the budget and the expenditures
Methods of Estimating
Analogous, Parametric, Bottom-up
Managing the Budget
Budget timeline
Budget variances
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Budget Management Summary (continued)
Budgeting and Cost Management are important activities for project managers
There are several methods for estimating the costs
Estimated costs may be used to choose between options
Project progress and budget management are closely related and can be managed with indices: BCWS, PV, SV, AC, CV, SPI, CPI, ETC, BAC and EAC
Contingency funds allow for the unexpected
Reporting to the team and to management are important components in budget management
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
Questions?
This work is licensed under a
Creative Commons Attribution 3.0 Unported License (CC-BY).
Project Management
Chapter 12: Budget Planning
23
image1.png
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteEdu. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
Do you need help with this question?
Get assignment help from WriteEdu.com Paper Writing Website and forget about your problems.
WriteEdu provides custom & cheap essay writing 100% original, plagiarism free essays, assignments & dissertations.
With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Chat with us today! We are always waiting to answer all your questions.