This website is a place to share supplemental learning materials with my students. We will discuss a range of topics related to project management and economic development. Materials compiled here include research papers, teaching materials, textbooks, quizzes, and lecture slides.
The contents of the Website are works in progress, unless otherwise is expressly stated. Consequently, contents will change continually. If you have any suggestions as to how the site might be improved, please do not hesitate to contact me with your comments.
Course: Project Costing and budgeting
Resource availability is a fundamental concept in project management. Competing demand for scarce resources at both project and organizational level requires project managers to make optimum use of available resources. Experienced project managers understand the need to create customer value efficiently. Two key factors justify this pursuit of efficiency. 1) In the short-term, the success or failure of all projects is evaluated based on cost management, schedule control and customer satisfaction (i.e. does the product or the result of the project fulfill the customer’s requirements?). These three variables are often referred to as the triple constraint or the project triangle. 2) Because organizations have limited resources, the ability of a project manager to manage allocated resources both effectively and efficiently plays a key role in determining the success or failure of a project.
As we may all agree, money is a common denominator for many project resources, including labor, equipment, materials, technology, and facilities. Successful project managers must have the ability to cost and manage the budget of a project through its entire life cycle. Project cost and budget management teaches students the processes, the tools and techniques necessary to develop a realistic project budget and manage it from the initiation to the completion of the project.
We will explore such key concepts as estimating techniques (e.g., Three-point estimating and parametric estimating techniques), earned value management, estimated monetary value, budgeting techniques and budget systems, contract management, cost control and cost of quality. The course aims to develop both your technical and analytical skills. You will assess your technical skills by developing a realistic budget. You will do that with the aid of project management software. You will have the opportunity to develop your analytical abilities by connecting project management concepts and theories with real life examples and case studies.
At the end of this course, and having completed the reading assignments, you will have an opportunity to:
- Define specifically the scope of a project (e.g., the scope of a project should be SMART)
- Define and create a quality work breakdown structure (WBS)
- Demonstrate an understanding of the major approaches to creating cost and duration estimates (e.g., analogous, parametric, three-point, and learning curve estimating techniques).
- Describe different methods for managing estimating uncertainty
- Define the estimating life-cycle
- Define and illustrate project costs as a cost object.
- Distinguish between direct cost and indirect cost.
- Differentiate between variable cost and fixed cost.
- Differentiate between full costing (required under GAAP) and activity-based costing (ABC).
- Define sunk cost.
- Demonstrate an understanding of how resource availability affects project performance
- Distinguish between duration and effort in project costing and budgeting
- Explain the process to creating a cost performance baseline
- Demonstrate an understanding of the role of the project budget as a planning tool
- Demonstrate an understanding of the role of the project budget as a performance evaluation tool
- Demonstrate an understanding of the role of the budget as a motivational tool
- Demonstrate an understanding of the role of the project budget as a communication tool
- Demonstrate an understanding of how the project budget is developed
- Identify the steps to creating the project budget
- Explain the role of resource planning and resource allocation in project costing and budgeting
- Differentiate between project budget and operating budget
- Differentiate between category budgeting and activity based budgeting (ABB)
- Demonstrate an understanding of time-phased budgeting
- Identify the key characteristics of a successful project budget
- Explain how quality management relates to project cost and budget management
- Explain how risk management relates to project cost and budget management
- Define contingency reserve and the Estimated monetary value concept
- Demonstrate an understanding of funding limit reconciliation
- Differentiate between contingency reserve and management reserve
- Define the process of Control Costs
- Demonstrate an understanding of variance analysis
- Identify the tools and techniques for controlling project costs
- Create reports to manage and control project costs
- Describe the importance of project cash flow analysis
- Explain how change control management affects the project budget
- Demonstrate an understanding of Earned Value Management as a project cost control tool
- Describe the role of each project stakeholder in the budgeting process
- Prepare a project budget using a project management software
- Describe how to use the project critical path for trade-off analysis between cost and time
- Describe the process of make-or-buy analysis when acquiring project resources
- Describe the concept of cost of quality and explain how it affects the project budget
Important Note: This Website is not a substitute for textbooks or the course Website in Blackboard. Please read your syllabus carefully. The syllabus contains key information you need to complete this course successfully.