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Cost Management
- 1. Cost Management Vidit DesaiApurva Thakkar M Shajid Ali Jigar Mehta
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- 4. Agenda • Team MembersIntroduction • Introduction to Cost Management • Role of Cost Management in Project Management • Importance of Cost in Project Management • Case Studies • Industries Most Successful in Project Management • Software for Cost/Project Management • Becoming an Expert • Conclusion
- 5. Introduction to CostManagement
- 6. Cost Management • Planning •Establishing Policies, Procedures and Documentation • Estimate • Rough Order of Magnitude (ROM) estimate - -50% to +200%. • Budgetary Estimate - -10% to +25%. • Definitive estimate - -5% to +10%. • Determine Budget • Aggregating the estimated costs of individual activities or WP to establish cost baseline. • Control Cost • Monitoring the status to update costs and managing changes to the cost baseline
- 7. Role of CostManagement in Project Management
- 9. Planning Cost Management •Inputs: • Project Management Plan • Project Charter • Organizational process • Process: • Meetings • Expert judgment • Analytical techniques • Outputs: • Cost management plan
- 10. Estimating Cost Management •Inputs: • Cost management plan • Scope baseline, project schedule • Organizational process assets • Process: • Group decision making • Expert judgement, Vendor bid analysis • Analogous, parametric, Bottom-up estimating • Outputs: • Activity cost estimates • Basis of estimates
- 11. Determine Budget • Inputs: •Cost management plan • Project schedule • Risk register • Process: • Funding limit reconciliation • Cost aggregation • Historical relationships • Outputs: • Project funding requirements • Cost baseline
- 12. Control Cost • Inputs: •Project management plan • Project funding requirements • Work performance data • Process: • Earned value management • Reserve analysis • Project management software • Outputs: • Work performance informance • Change requests
- 13. Importance of Costin Project Management
- 14. Importance of Costin Project Management • Determinant Of Business Success. • Focal Point In decision Making • Measurement Of Performance. • Advisory Role • Optimal Utilization Of Resources
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- 16. Case Study: Wrigley •Smart use of financial resources. • Improved gross margins and overall efficiency • Out Invested their Competitors.
- 17. Case Study: DenverAirport Baggage System • Underestimation of budget. The project over budgeted 560M USD with a daily maintenance of 1M USD. • Had several variable costs such as fuel cost and labor rates.
- 18. Case Study: EuroTunnel • Project cost was 13 billion USD, with a 80% going over budget after the completion. • Financial Problems with optimistic revenue projections. • Construction Cost Overruns.
- 19. Industries Most Successfulin Project Management
- 20. Industries Most Successfulin Project Management Some of the most Project-intensive Industries • Manufacturing • Finance & Insurance • Information Services • Utilities • Business Services • Oil & Gas • Construction • Healthcare • Construction • Aerospace and Defense
- 21. Industries Most Successfulin Project Management Based on what the industry pay their Project Manager the rankings are • Consulting Industry • Natural Resource • Pharmaceuticals • Aerospace and Engineering • Healthcare • IT Industries
- 22. Software for CostManagement
- 23. Software for Cost/ProjectManagement • Vital part of ensuring a business remains efficient and profitable • When Selecting look at a variety of attributes • Price • Ease of use • Suitability for the size of the business • Cost Management Applications with focus on cost at the project level • Project Management Application with measure of Cost Management • Cost Management Software for Business as a whole with Integration with Project Management Software.
- 24. Software for Cost/ProjectManagement • aPriori • enterprise-level cost management solutions for businesses in the manufacturing industry • software’s analytical capabilities highlights cost savings in material and labor • Unique feature 3-D CAD modeling that facilitates the cost analysis
- 25. Software for Cost/ProjectManagement • Price Systems TruePlanning • For companies producing software products or information technology solutions • Cost management software that focuses on the process of cost estimating and analysis • Uses algorithms that leverage real-world project experience derived from more than 11,000 projects over the past 30 years • Tools necessary to predict and ultimately manage costs • Modules for bid and proposal generation as well as vendor selection management
- 26. Software for Cost/ProjectManagement • Microsoft Project • Smaller businesses can’t afford a larger enterprise level cost management software • Primarily focused on project management • Still provides a large measure of cost estimating and management functionality • Integrates seamlessly with Microsoft Office Suite • As well as other popular small business accounting App • Provides Cost Management at low cost for small Business.
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- 28. Certification Project Management • PMICertification • Project Management Professional • Portfolio Management Professional • PMI Professional in Business Analysis Cost Management • Certified Management Accountant (CMA) • Certified Cost Professional (CCP) • Certified Estimating Professional (CEP)
- 29. Warren Buffett • LogicalInvestor • Risk Seeker • Effective Decision Maker • Visionary • Capitalist
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- 31. Mangalyaan – ASuccess Story • Most cost effective project to Mars • Cost = 11% NASA’s MAVEN Mars Orbiter • Mangalyaan cost = $74 Million • MAVEN cost = $672 Million
- 32. Mangalyaan – CostManagement • In house part production • Timing of the project • Time = Cost • Excellent Scope and time Management also.
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