1. Identify resource requirements for individual tasks identified in the work breakdown structure in consultation with relevant stakeholders
2. Estimate project costs for project budget to be prepared within agreed tolerances
3. Develop a project budget
4. Develop a cost-management plan for project finances according to scope of responsibility
5. Implement agreed financial-management processes and procedures for monitoring actual expenditure against budget
6. Identify cost variations and evaluate alternative actions
7. Implement and monitor agreed actions for maintaining financial objectives
8. Provide accurate and timely financial reports
9. Conduct activities to signify financial completion according to task and organisational requirements
10. Review project outcomes using available records
11. Review cost-management issues and document
Answer 1
A project budget involves an accurate, time-based estimation of the resource costs for each activity, task, and project milestone. Four things essential to be considered when preparing a budget includes the followings:
1. Direct cost- These are cost directly associated with the project
2. Indirect cost- These are cost which are indirectly incurred. Overhead cost and administrative cost falls in this category.
3. Capital expenditure – These are cost spend for buying or improving any fixed assets of the entity.
4. Contingencies- It refers to a cost set aside for meeting any contingencies in future.
Answer 2
In order to provide support in developing and implementing budget, project managers are required to create some documents these include the following:
1. An activity resource estimation that connects all resources available to each activity, milestone and task involved. It is beneficial to include anticipated cost to support individuals in budget-conscious task execution planning.
2. A usage log for variable cost or chart for resources with a limited lifespan. It is also important to have policies and procedures which would assist people in regularly completing the log.
3. A cashflow worksheet that subdivides the budget throughout the course of the entire project, including any planning and finalization phases.
4. Reporting templates with a project status update report that focuses on finances. In addition, it must also include lessons learned and suggestions section.
Answer 3
The four types of tools used for analyzing cost includes the following:
Earned Value Management (EVM): EVM can be defined as a project management tool that integrates Schedule, expenses, and scope to monitor project performance. Evm Forecasts The Future Based On Projected And Actual Values, Enabling Project Managers To Make Modifications Accordingly (EcoSys, 2022).
Forecasting: It refers to tool used for estimating the project cost. Even though forecasts can never provide accurate information, using the right techniques can give a decent idea of what can be expected.
TCPI: To-Complete-Performance Index provide the user with the future Cost Performance Index (TCPI) (Pmstudycircle.com, 2022). The To Complete Performance Index provides an estimate of prospective cost performance that might be required to meet the project's approved budget.
Reserve analysis: Reserve analysis is a specific analytical technique which is used to make a thorough determination of every single precise feature and, in many cases, determine connections of each of the individual project-related components which currently exist in the predetermined project management plan (Rinaldi, 2022).
Answer 4
The following are the five ways we can control or manage cost involved in any project:
1. Making use of a cash flow spreadsheet that maps all of the project's payment periods, milestones, and important financial dates to all of the fixed expenses and anticipated costs
2. keeping a petty cash system in place for small, unplanned expenses that might disrupt with output of work.
3. spreading out limited budgets across shorter time periods by using credit cards. Even though a business credit card brings many advantages, it also comes with fees and interest that have to be considered into our budget.
4. Organize all payments within one place. This is preferred to use among small teams where a uniform managerial structure exist.
5. This works by making one individual in charge of all purchases, income, and incidentals. When we have access to credit card, purchase orders and cash it work effectively.
6. Make use of purchase order- These are brief appeals for monetary contributions. Rationales for the expense, including whether it represents the best price available, any details of the expenditure, and the intended payment dates and methods, justify them.
Answer 5
Depending on the needs of the organization, a review of the outcomes could be formal or informal. A rigorous evaluation would involve auditing every expense to identify any errors, erroneous computations, amounts that exceeded or lower than anticipated, and wasteful areas. This can be performed using available usage record and expenditure records, invoices, receipts, pricing indexes, and some other source documents. Interviews, reviews of reports, debriefing sessions, and similar methods may also be employed for data collection. The same source materials might be used in an informal assessment as well, but the methodology and reporting style may vary. These would comprise of minor modifications to reports, policies, procedures, risk plans, templates and other documents within the sphere of control and responsibility.
Answer 6
1. Health and safety in the workplace, especially for expenditure on components that would safeguard project staff members' health and reduce stress.
2. Staff management, encompassing project-specific training and onboarding procedures, together with change management for other product lines and any outside stakeholders.
3. identification of risk, control rating and reporting of risks, especially those relating to projects that might affect insurance, and cost management as well as affect schedules.
4. Financial approvals, which include comparing any payment requests with the planned expenditures for the project.
5. Data recording, reviewing, and other means of data monitoring; centralized reporting; and record-keeping, which includes the use of version control across all documents.
6. Payment Authorization concerning payment request forms, Purchase orders, usage of quotes, and other processes
7. Measuring cost in contrast with budget by using Charting, entering data into spreadsheets or using cost management software, reports, tolerances, and other methods.
8. Providing report or seeking approval for modification including variation request forms, approval processes, and communication of adjustments.
9. Invoicing and debt recovery, including timelines for various stages of realizing invoices and collecting debt and any risk management policies for overdue invoices.
10. Financial communications that comply with our communication strategy and any additional client or organization communication requirements.
Reference
EcoSys. (2022). Earned Value Management: EVM Basics | EcoSys. EcoSys. Retrieved 28 July 2022, from https://www.ecosys.net/knowledge/earned-value-management-basics/.
Pmstudycircle.com. (2022). To-Complete Performance Index (TCPI) in Project Cost Management |. Pmstudycircle.com. Retrieved 28 July 2022, from https://pmstudycircle.com/to-complete-performance-index-tcpi-in-project-cost-management/.
Rinaldi, R. (2022). Reserve Analysis: PMP Topics to Know. Magoosh PMP Blog. Retrieved 28 July 2022, from https://magoosh.com/pmp/reserve-analysis-pmp-topics-know/#:~:text=PMBOK%20describes%20reserve%20analysis%20as,a%20project%E2%80%9D%20(558).
