Assessment 4
 

  • PRINT
  • Project Cost Estimate

Overview
For this assessment, you will estimate the costs of the project you selected in Assessment 1. Your project cost estimate is to include all necessary supporting documentation, such as constraints, dependencies, and assumptions.
Note: In this course, you will develop a project plan by completing a different component of the plan for each assessment. Therefore, you will need to complete the assessments in the order in which they are presented.
Estimating project budgets is far from an exact science. Many of us have heard of projects running over budget. Why is this? Why do we consistently forecast low? There are many reasons for this, from improper funding at the beginning of the project to cutting corners that should never have been cut. Whatever the reason, there is a need for project managers and their teams to become better at forecasting cost.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 2: Analyze current best practice approaches to develop cost estimates and resource constraints to ensure successful project outcomes.
    • Organize project expenditures by category and priority.
    • Describe constraints relative to estimating project cost resources.
    • Analyze resource constraints and constraint characteristics of a project.
    • Describe assumptions relative to estimating project cost resources.
    • Incorporate industry best practices to successfully meet budget plan.
  • Competency 6: Communicate in a manner that is professional and consistent with expectations for members of the business profession.
    • Communicate in a manner that is professional and consistent with expectations for members of the business profession.

Context
Project Budgeting Methods
There is no hard rule for project budgeting, but there are tools that you can use to aid you in setting up a project budget. Meredith and Mantel (2012) outline top-down and bottom-up budgeting. You will probably find that one fits your needs and your project better than the other.
Plan for the Unexpected
In our personal finances, we budget for the expected and the unexpected. We can apply the same idea to the cost estimates for projects. Continuously ask yourself how you will respond to unforeseen costs or delays. In other words, how can you plan for the unexpected?
Reference
Meredith, J. R., & Mantel, S. J. (2012). Project management: A managerial approach (8th ed.). Indianapolis, IN: Wiley.
Questions to Consider
To deepen your understanding, you are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of the business community.
You have developed the project schedule and are working on your cost estimate. Consider how you use the project schedule to help develop the cost estimate. Consider your own project for the following questions:

  • How will you reach the level of detail needed for a complete cost estimate?
  • What items should you include in your cost estimates that are not explicitly present in the project schedule?
  • Toggle Drawer

Resources
Required Resources
The following resources are required to complete the assessment.
Resources
Click the links provided to view the following resources:

  • Assessment 4 Coaching.
  • Cost Estimate Template.

 
Suggested Resources
The following optional resources are provided to support you in completing the assessment or to provide a helpful context. For additional resources, refer to the Research Resources and Supplemental Resources in the left navigation menu of your courseroom.
Multimedia
Click the link provided below to view the following multimedia piece:

  • Concept Map.
  • Project Cost Estimate| Transcript.

Library Resources
The following e-book  is linked directly in this course:

  • Project Management Institute. A guide to the project management body of knowledge—Fifth Edition. Newtown Square, PA. 2013.

Internet Resources
Access the following resources by clicking the links provided. Please note that URLs change frequently. Permissions for the following links have been either granted or deemed appropriate for educational use at the time of course publication.

  • Albert, C. (2006). Common elements of risk(CMU/SEI-2006-TN-014). Retrieved from the Software Engineering Institute, Carnegie Mellon University website: http://www.sei.cmu.edu/library/abstracts/reports/06tn014.cfm
  • Billows, D. (2006). Post-project reviews: Lessons never learned. Retrieved from http://4pm.com/project-lessons-learned/
  • Project Management Institute. (2013). Retrieved from http://www.pmi.org

Bookstore Resources
The resources listed below are relevant to the topics and assessments in this course and are not required. Unless noted otherwise, these materials are available for purchase. When searching the bookstore, be sure to look for the Course ID with the specific –FP (FlexPath) course designation.

  • Meredith, J. R., & Mantel, S. J. (2012). Project management: A managerial approach(8th ed.). Indianapolis, IN: Wiley.
  • Schwalbe, K. (2016). Information technology project management(8th ed.). Boston, MA: Cengage.

Additional Book Resources
You may wish to purchase the optional resources below from your preferred vendor:

  • Mulcahy, R. (2013). PMP exam prep(8th ed.). Minneapolis, MN: RMC.
  • Schwalbe, K. (2012). An introduction to project management. Minneapolis, MN: Kathy Schwalbe.
  • Schwalbe, K. (2013). Managing information technology projects. London, UK: Cengage Learning.
  • Assessment Instructions

Note: In this course, complete the assessments in the order in which they are presented.
For this assessment, estimate your project costs for the project you selected in Assessment 1, using an Excel spreadsheet. For tutorials on using Microsoft Excel, refer to the Computer Skills section under the Supplemental Resources link in the left navigation menu of the courseroom.
Be sure to use the following resources as you complete your assessment:

  • Review the Concept Map (linked in the Resources under the Multimedia heading) to see how the project cost estimate fits into the project management life cycle.
  • Read the Assessment 4 Coaching document (linked in the Resources under the Required Resources heading) for expert tips and advice on how to create a project cost estimate.
  • Refer to the Project Cost Estimate media piece (linked in the Resources under the  Multimedia heading) for information on cost estimates.

Use the Cost Estimate Template (linked in the Resources under the Required Resources heading), which is a simple Excel spreadsheet, to estimate your project costs. Be sure to include all necessary supporting documentation, such as constraints, dependencies, and assumptions.
Complete the following:

  1. Determine project expenditures.
  2. Organize project expenditures by category and priority.
  3. Determine constraints relative to estimating project cost resources.
  4. Analyze the resource constraints and constraint characteristics of the project.
  5. Describe assumptions relative to estimating project cost resources.
  6. Incorporate industry best practices to successfully meet budget plans.

Submit your project cost estimate as an Excel file.
 

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