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3 pm3 c_1%20-%20developing%20the%20cost%20plan
 

3 pm3 c_1%20-%20developing%20the%20cost%20plan

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    3 pm3 c_1%20-%20developing%20the%20cost%20plan 3 pm3 c_1%20-%20developing%20the%20cost%20plan Presentation Transcript

    • Acceptance and Flowdown
      A formal acceptance is signed by an “authorized” representative (usually the project manager or contracts)
      this must be “flowed down” internally in order to authorize project work via an internal purchase, sales or work order comprising:
      “Statement of Work” for authorized amount = Contract SOW (CSOW)
      Contract Price – which forms the “Contract Price” used to derive the eventual budget (Week 4)
      Eventually, these contractual requirements will be reflected in the project planning documents through to the lowest level
      Control Accounts will be set up to contain the budgetted “Contract” price (Cost Planning)
      Issues project work orders to flow down the authorized scope (Scope Planning)
    • The Contract drives the Project
      674-2435
      Scope
      Flowdown
      Funding
      Flowdown
      Contract
      Project work is driven by some form of “Contract”
      Formal contracts are usually established with external customers
      “Informal” contracts are/should be established with “internal” customers, and may simply be memo’s, work orders, or an e-mail
      These Contracts “evolve” into the top level program instructions through a process that involves:
      Reviewing the “proposed” contract requirements
      Preparing a response
      Negotiating and accepting the final contract
      “Flowing down” the final contract into the project
      At each step, the contract contains two distinct elements:
      The “work to be performed”, or Scope
      The resources (funds, equipment, staff) to be provided to pay for performance and profit
      Contract
      Review/
      Proposal
      Cost
      Estimate
      Scope Planning
      NContract Negotiations
      Contract
      SOW
      Contract
      Price/
      Program
      Budget
      Program
      Work
      Order
      Control
      Accounts
    • The Contract drives the Project
      674-2435
      Scope
      Flowdown
      Funding
      Flowdown
      Contract
      Project work is driven by some form of “Contract”
      Formal contracts are usually established with external customers
      “Informal” contracts are/should be established with “internal” customers, and may simply be memo’s, work orders, or an e-mail
      These Contracts “evolve” into the top level program instructions through a process that involves:
      Reviewing the “proposed” contract requirements
      Preparing a response
      Negotiating and accepting the final contract
      “Flowing down” the final contract into the project
      At each step, the contract contains two distinct elements:
      The “work to be performed”, or Scope
      The resources (funds, equipment, staff) to be provided to pay for performance and profit
      Contract
      Review/
      Proposal
      Cost
      Estimate
      Cost Planning
      NContract Negotiations
      Contract
      SOW
      Contract
      Price/
      Program
      Budget
      Program
      Work
      Order
      Control
      Accounts
    • ?
      Cost Planning
      Scope Planning
    • ?
      Cost Planning
      Scope Planning
      $
      Cost Planning = Matching authorized funds with authorized work to make things happen
    • Basis of
      Estimate
      (BOE)
      Work
      Breakdown
      Structure
      Distributed Budget
      Work
      Order
      Control Accounts
    • Basis of
      Estimate
      (BOE)
      A cost estimate is prepared.
      The estimate is converted into a project budget, usually through contract negotiation.
      The budget is divided into control accounts.
      The control account budgets are “distributed” to fund the scope which has been assigned to Work Packages to create the “distributed budget”
      Project
      Budget
      Cost Estimating
      Distributed Budget
      Control Accounts
    • Basis of
      Estimate
      (BOE)
      A cost estimate is prepared.
      The estimate is converted into a project budget, usually through contract negotiation.
      The budget is divided into control accounts.
      The control account budgets are “distributed” to Work Packages to create the “distributed budget”
      Project
      Budget
      Cost Estimating
      Distributed Budget
      Control Accounts
      Cost Budgetting
      How do we know which Work Packages to distribute the budgets to?
    • Closing the Loop between Work and Funding
      5. The WBS is used to define both the Control Accounts and the Work Packages being authorized.
      Because of this common link, funds in the distributed budget “line up” with Work Packages, so that
      Budget and Work Packages may be connected and used to authorize work through a “Work Order” form
      Cost Estimation
      Cost Budgetting
      Work Authorization