{"id":7088,"date":"2017-09-22T14:15:35","date_gmt":"2017-09-22T12:15:35","guid":{"rendered":"https:\/\/altax.al\/project-cost-estimation\/"},"modified":"2021-11-21T10:54:19","modified_gmt":"2021-11-21T09:54:19","slug":"project-cost-estimation","status":"publish","type":"post","link":"https:\/\/altax.al\/en\/project-cost-estimation\/","title":{"rendered":"Project Cost Estimation"},"content":{"rendered":"<p>In this presentation is published all the necessary steps and elements that should be included in the costs of a Project.<\/p>\n<p><!--more--><\/p>\n<p><strong>The Problem<\/strong><\/p>\n<ul>\n<li>The Program Manager\u2019s Job<\/li>\n<li>Plan the Project<\/li>\n<li>Estimate the Cost and Establish the Budget<\/li>\n<li>Identify and Acquire Necessary Resources (People, Equipment, etc.)<\/li>\n<li>Manage it (to the schedule, within budget)<\/li>\n<li>The Manager\u2019s Dilemma<\/li>\n<li>Cost is Usually the Boundary that Cannot be Crossed<\/li>\n<li>Cost is a Determined by How Much (labor, materials, etc.) and How Long (Schedule)<\/li>\n<li>So How Do You Figure Out What it Will Take Before You\u2019ve Done It?<\/li>\n<\/ul>\n<p><strong>Understanding &#8220;What\u2019s in the Cost&#8221;<\/strong><\/p>\n<ul>\n<li>Elements of Costs<\/li>\n<li>Direct Costs &#8211; Attributable to the Project:<\/li>\n<\/ul>\n<p>Salaries and Associated Benefits, Materials, Payments to Subcontractors or Consultants, Project Related Travel<\/p>\n<ul>\n<li>Indirect (Overhead) Costs &#8211; Necessary Business Expenses:<\/li>\n<\/ul>\n<p>General Administrative Costs, Facility (Space, Utilities, Insurance), Marketing, Ongoing Research and Development<\/p>\n<ul>\n<li>Basic Equation:<\/li>\n<li>Cost = Labor x Time + Other Direct Costs + Indirect Costs<\/li>\n<\/ul>\n<p><em>Note: Indirect Costs are Usually Allocated on Some Proportional Basis Each project a Business is Executing<\/em><\/p>\n<p><strong>The Process (Figuring out What it Takes)<\/strong><\/p>\n<ul>\n<li>Step 1 &#8211; Break the Project Down into a Set of Definable Tasks<\/li>\n<li>Iterative, Top Down Process\n<ul>\n<li>Identify Major Activities (Design, Development, Integration, Test, Production)<\/li>\n<li>Break Down Further into &#8220;Self Contained&#8221; tasks (Design User Interface, Develop Database Software, Develop Prototype xyz Board)<\/li>\n<li>Take it Down One or More Steps Depending on Size and Complexity (Layout All Display Formats, Determine Operator Action\/Entry Sequences, Define Limit Tests and Error Notifications)<\/li>\n<\/ul>\n<\/li>\n<li>Too Little Breakdown is Bad, Too Much is Bad &#8211; it takes a Balance<\/li>\n<li>Tools &#8211; Logic, Analysis, Experience<\/li>\n<\/ul>\n<p><strong>The Process &#8211; Estimating Each Task<\/strong><\/p>\n<ul>\n<li>Determine What it Takes to Address Each Task in the WBS<\/li>\n<li>Usually Focused on Labor<\/li>\n<li>What Type (Programmer, Engineer, Network Administrator, Writer\/Illustrator)<\/li>\n<li>Experience Mix\n<ul>\n<li>May Look Like Mini Project Teams (Some Guidance from a Senior Type + 2 Juniors doing details and a Writer)<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li>Estimate How Long the Task Should Take<\/li>\n<li>Very Subjective\n<ul>\n<li>Historical Performance Metrics and\/or or Personal Experience Helps<\/li>\n<li>Capabilities\/Limitations of Candidate Project Team Members Must be Considered<\/li>\n<\/ul>\n<\/li>\n<li>Cover the Gaps (the Team is usually Fixed and Finite)\n<ul>\n<li>Plan for Continuous Tasking for each member Until No Longer needed<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>The Process &#8211; Preparing the Schedule<\/strong><\/p>\n<ul>\n<li>Schedule the Tasks<\/li>\n<li>Assess Start Point for Each (Possibly Relative to Progress of Others)<\/li>\n<li>Assumes Some Sequence\/Dependency Analysis Has Been Conducted<\/li>\n<li>Insert Milestones<\/li>\n<li>Key Review\/Delivery\/Test Points<\/li>\n<li>Evaluate the Result<\/li>\n<li>Staff Profile (is it Reasonable)<\/li>\n<li>Make Necessary Adjustments (Schedule, Resource Mix, etc.)<\/li>\n<\/ul>\n<p><strong>The Process &#8211; Calculating the Cost<\/strong><\/p>\n<ul>\n<li>Labor<\/li>\n<li>Schedule and Staff Profile Summarizes Labor Types and How Much of Each (Total Hours, Days Weeks etc.)<\/li>\n<li>Labor Hour Costs Normally are Salary + Fringe Multiplier<\/li>\n<li>Materials<\/li>\n<li>Delivered or Consumed as Part of Project\n<ul>\n<li>Computers, Software Licenses, Peripherals, etc. Delivered to Customer<\/li>\n<li>Usually a &#8220;Firm Number&#8221; Supported by Vendor Quotes<\/li>\n<li>Paper, Special Materials to be Used During Job for Books, Pictures, Etc.<\/li>\n<li>Typically, a &#8220;Best Estimate&#8221; and Minor Relative to Materials and Labor<\/li>\n<\/ul>\n<\/li>\n<li>Consultants and Subcontractors Costs<\/li>\n<li>Consultants Costs Predicted Based on Hourly Quote and Usage Estimate<\/li>\n<li>Subcontractors Based on Firm Quote for Services<\/li>\n<li>Other (Travel, Etc.)<\/li>\n<li>Estimates Based on Job Requirements<\/li>\n<li>Add it Up:<\/li>\n<li>Cost =Labor (w\/Fringe) + Materials +Consultants\/Subs +Other + Indirect<\/li>\n<\/ul>\n<p>We Have a WBS, Schedule Cost<\/p>\n<p>Now what..?<\/p>\n<p><strong>A Final Look<\/strong><\/p>\n<ul>\n<li>Prepare to Track It<\/li>\n<li>Set Up a Total Cost Profile (How the Project Flows Financially)<\/li>\n<li>Set Up a Labor Profile (Either by Hours, Labor Cost &#8211; or Both)<\/li>\n<li>During Execution<\/li>\n<li>Account for Expenses Against WBS items<\/li>\n<li>Review &#8220;Progress&#8221; Against Cost Profile Regularly<\/li>\n<li>If behind Schedule, Ahead of Cost Profile, must be problems<\/li>\n<li>Another Dilemma<\/li>\n<li>&#8220;If You Can\u2019t Measure It &#8211; You Can\u2019t Track It.&#8221;<\/li>\n<li>&#8220;If You Don\u2019t Know Where You\u2019re Going &#8211; You Might End Up Somewhere Else&#8221;<\/li>\n<\/ul>\n<p>\u00c2\u00a0These are all the steps for the calculation of cost of a project.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this presentation is published all the necessary steps and elements that should be included in the costs of a Project.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[10281],"tags":[8229,8273,10556,10244,8274],"class_list":["post-7088","post","type-post","status-publish","format-standard","hentry","category-online-education","tag-cost","tag-estimation","tag-project","tag-project-cost-en-2","tag-task"],"featured_image_src":{"landsacpe":false,"list":false,"medium":false,"full":false},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Project Cost Estimation - ALTAX<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, 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