Costs in Project Management - Costs associated with the Projects
The following are the costs associated with the projects.
A cost be either Fixed or Variable; Direct or Indirect
The overhead costs for this project are the office setup and shared services. While the costs incurred in setting up the office space can be general overhead cost as it is a one-time cost and is borne by all the projects in the organization.
The project overhead costs are the costs incurred in the shared services such as secretarial staff and other services provide to the project and can be directly billable as such.
Time phased budget
A time phased budget would include the costs incurred at each interval or milestone of the project. The milestones for this project would be requirements, design, coding, testing and implementation. The budget for the same would be the costs at each stage of the project.
The budget at completion or BAC should have all the components of the costs included like direct and indirect costs, fixed and variable costs etc along with the cost at each phase or milestone of the project. The cost variance should be measured using Earned Value technique and this tool allows the manager to assess the completion of the project at each milestone according to the cost incurred and the value accrued till then. Variance between these two measures gives an accurate estimate of the health of the project.
The cumulative costs of the project are the ones that are incurred up to a specific phase or milestone of the project. It can be measured by using a Cost Performance Index or CPI which measures the ratio of the Earned value with regards to the Actual cost incurred on the project. As outlined above, all the costs that accumulate up to a particular phase can be called the cumulative costs of the project.
The cost management plan should include the plan for controlling the costs of the project. There should be a measurement of the costs involved and their variances tracked, if any. Any variance to the budget must be controlled by the controlling the impact of the cost changes.
Further, cost control can be done in the area of overhead costs and general and administrative expenses.
- Behavioural Models for Project Managers
- Role of Project Managers
- Soft Skills for Project Managers
- Bidding as an Essential Skill for Project Managers
- Components of a Project Plan
- Software Project Management
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