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Part 1
1) You are providing a review of contractor bids for a
component of your upcoming project. What can be done to
determine whether or not a vendor’s bid is reasonable?
To decide whether the vendor's bid is sensible I would check
for the following steps:
• The bid ought to be in accordance with the project estimate
cost and ought to comply with it
• The temporary worker presenting the bid ought to be
genuine and have great reputation
• The bid ought to pursue all the legitimate prerequisites
• The bid ought to be legitimate for the project and should
fulfill all of the segments
• The bid should also pursue every one of the terms and
conditions referenced for the venture
2) Describe the conditions for which parametric, analogous and
bottom up estimation techniques work best, and provide 2
examples in support of each method.
Parametric estimation: It is an estimation of cost, time
or risk that is based on a calculation or algorithm. As the name
suggests, parametric estimates are based on parameters that
define the complexity, risk and costs of a program, project,
service, process or activity.
E.g.
1. A moving company estimates the price of an office move
using a base cost and variable cost based on the number of
employees and distance. Unique complexities such as moving an
air conditioning system is added as a separate cost. This base
cost is multiplied by surcharges for moving to a multi-floor
premise and working on a weekend.
2. The expense to construct a current shopping complex can be
referred and we can add the resources to decrease the time
dependent on past information and scientific estimations.
Analogous Estimation: This type of estimation depends on the
past historical data as well as the performance of the project
team
E.g.
1. In the event that an organization has undertaken advancement
of an application and delivered it effectively, this can be
utilized for estimation if similar application needs be created
2. For example, if it cost $7,100 to develop a website a few
months ago and you are responsible for developing a new
similar website, you estimate it to cost $7,100.
Bottom-up Estimation: This type of estimation can be done by
breaking the entire project into modules and considering them
individually.
E.g.
1. Individual managers must first create their own budgets,
referencing past budgets and spending patterns while
incorporating cost projections for the upcoming fiscal year.
Upper-level managers and executives must then review all the
budgets that managers submit, combining them to determine
totals.
2.A project which requires high amount of detail and accuracy
3.Why is a cost management plan important? How does the
plan benefit the project manager?
Cost management is the way toward assessing, allotting, and
controlling the expenses in a project. It enables a business to
anticipate coming costs so as to diminish its odds going over
spending plan. It is one of the most important and essential part
of the project planning phase and it also effectively serves as a
baseline that guarantees that the project cost is kept within the
limits of the budget.
Part 2 Budget Estimating (30 points)
Using the same scenario from the previous unit on scheduling,
create a time-phased budget for the following project. Prepare a
figure like Exhibit 10.9, CPT 4e, that illustrates the daily and
cumulative costs for the resource-leveled project.
Assume the following hourly rates:
Alcides $45 / hr.
Joan $50 / hr.
AGGREGATION OF PROJECT BUDGET
Duration in Days
Resource
D1
D2
D3
D4
D5
D6
D7
D8
D9
D10
2
Alcides
270
270
6
Joan
200
200
200
200
200
200
2
Alcides
270
270
3
Alcides
270
270
270
10
Joan
200
2
Alcides
5
Joan
4
Joan
2
Alcides
Total for the day
470
470
470
470
200
200
270
270
270
200
Cumulative
470
940
1410
1880
2080
2280
2550
2820
3090
3290
Duration in Days
Resource
D11
D12
D13
D14
D15
D16
D17
D18
D19
D20
2
Alcides
6
Joan
2
Alcides
3
Alcides
10
Joan
200
200
200
200
200
200
200
200
200
2
Alcides
270
5
Joan
200
4
Joan
200
2
Alcides
Total for the day
200
200
200
200
200
200
200
200
200
670
Cumulative
3490
3690
3890
4090
4290
4490
4690
4890
5090
5760
Duration in Days
Resource
D21
D22
D23
D24
D25
D26
2
Alcides
6
Joan
2
Alcides
3
Alcides
10
Joan
2
Alcides
270
5
Joan
200
200
200
200
4
Joan
200
200
200
2
Alcides
270
270
Total for the day
670
670
400
200
270
270
Cumulative
6430
6830
7230
7430
7700
7970
TIME PHASE SCHEDULE
Activity
Time
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
A
2
X
X
B
6
X
X
X
X
X
X
C
2
X
X
D
3
X
X
X
E
10
X
X
X
X
X
X
X
X
X
X
F
2
X
X
G
5
X
X
X
X
X
H
4
X
X
X
X
I
2
X
X
Part 3 Budget Estimating (50 points)
You are the project manager for a process improvement project
for Company XYZ. Prepare a figure like Exhibit 10.9 that
illustrates the weekly and cumulative costs for the resource-
leveled project.
Hint: To accomplish this exercise, you’ll need to create a
project schedule in MS Excel (or by hand), create resource
assignments, assign costs to each resource, and assign the
resources to each task. Some resource leveling will be
required.
In this project, you have 3 employees: Ann, Becky and Clive.
Each person is limited to the amount of time allocated to your
project. Ann and Becky are available 30 hours/week; Clive is
available 20 hours/week. There hourly rates are: Ann:
$60/hour; Becky: $35/hour; and Clive: $50/hour.
AGGREGATION OF PROJECT BUDGET
Activity
Duration In weeks
Resource
Week1
Week2
Week3
Week4
Week5
Week6
Week7
1.1.1
3
Becky
1050
1050
1050
1.1.2
1
Ann
1800
1.1.3
2
Clive
1000
1000
1.2.1
2
Ann
1800
1800
1.2.2
2
Becky
1050
1050
1.2.3
1
Ann
1800
1.2.4
1
Clive
1000
1.3.1
2
Clive
1000
1000
1.3.2
4
Ann
1800
1.3.3
3
Becky
1.3.4
3
Becky
1050
1050
1.4.1
2
Becky
1.4.2
2
Clive
1.4.3
2
Ann
1.4.4
2
Clive
1.4.5
2
Clive
Cost per week
3850
3850
1050
2850
2050
3850
3850
Cumulative Cost
3850
7700
8750
11600
13650
17500
21350
Activity
Duration In weeks
Resource
Week8
Week9
Week 10
Week 11
Week 12
Week 13
Week 14
1.1.1
3
Becky
1.1.2
1
Ann
1.1.3
2
Clive
1.2.1
2
Ann
1.2.2
2
Becky
1.2.3
1
Ann
1.2.4
1
Clive
1.3.1
2
Clive
1.3.2
4
Ann
1800
1800
1800
1.3.3
3
Becky
1050
1050
1050
1.3.4
3
Becky
1050
1.4.1
2
Becky
1050
1050
1.4.2
2
Clive
1000
1000
1.4.3
2
Ann
1800
1800
1.4.4
2
Clive
1.4.5
2
Clive
Cost per week
2850
2850
2850
2050
2050
2850
1800
Cumulative Cost
24200
27050
29900
31950
34000
36850
38650
Activity
Duration In weeks
Resource
Week15
Week16
Week 17
Week 18
1.1.1
3
Becky
1.1.2
1
Ann
1.1.3
2
Clive
1.2.1
2
Ann
1.2.2
2
Becky
1.2.3
1
Ann
1.2.4
1
Clive
1.3.1
2
Clive
1.3.2
4
Ann
1.3.3
3
Becky
1.3.4
3
Becky
1.4.1
2
Becky
1.4.2
2
Clive
1.4.3
2
Ann
1.4.4
2
Clive
1000
1000
1.4.5
2
Clive
1000
1000
Cost per week
1000
1000
1000
1000
Cumulative Cost
39650
40650
41650
42650
TIME PHASE SCHEDULE
Activity
Time
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
1.1.1
3
X
X
X
1.1.2
1
X
1.1.3
2
X
X
1.2.1
2
X
X
1.2.2
2
X
X
1.2.3
1
X
1.2.4
1
X
1.3.1
2
X
X
1.3.2
4
X
X
X
X
1.3.3
3
X
X
X
1.3.4
3
X
X
X
1.4.1
2
X
X
1.4.2
2
X
X
1.4.3
2
X
X
1.4.4
2
X
X
1.4.5
2
X
X

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