Project Management and Cost Analysis

This assignment requires students to analyze a project management scenario and apply various concepts such as cash flow budget, static budget, and cost management. The student is expected to determine resource requirements, estimate project costs, develop a cost management plan, and prepare accurate financial reports using scheduling and budgeting software.

Running head: MANAGE PROJECT COST
Manage Project Cost
Name of the Student
Name of the University
Author Note

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MANAGE PROJECT COST
Table of Contents
Project 1...............................................................................................................................2
Project 2...............................................................................................................................8
2.1. Master Budget...........................................................................................................8
2.2. Operating Budget......................................................................................................9
2.3. Financial Budget.....................................................................................................10
2.4. Cash Flow Budget...................................................................................................11
2.5. Static Budget...........................................................................................................12
Observation Report............................................................................................................13
References..........................................................................................................................15

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MANAGE PROJECT COST
Project 1
Fred’s shed received a project from Mr. Jones for building a large storage shed on his
property. Mr. Jones has asked for the quote of designing and implementation of the project. The
different activities and the works that are needed to be completed while implementing this
project is mentioned in the work break down structure of the project along with the project
budget and the resource requirements (Mir & Pinnington, 2014). The project work will be
starting in six week and should be completed within 3 weeks time and therefore, the project
budget is prepared accordingly (Walker, 2015). The expected start date for the project is 2 May,
2018. The work breakdown structure of the project is as follows-
Fred’s Shed
Work Breakdown Structure
Task
Number/I
D
Task
Description
Predecessor
s
Time Resources Cost
0 Fred's Shed
Construction
20 days $40,000.00
1 Project starts 0 days Contractor Fred $0.00
2
Requirement
Analysis and
Project
Planning
$1,845.00
3
Site
inspection and
setting up a
meeting with
Mr. Jones for
design
requirements of
the shed
1 3 hrs Contractor Fred , Planner
and subcontractors
$705.00
4 Estimation
of the materials
needed and
sharing the
3 4 hrs Contractor Fred , Planner
and subcontractors
$940.00

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MANAGE PROJECT COST
estimation with
Mr. Jones
5
Documentation
and payment
received for
staring the work
4 4 hrs Planner and subcontractors $200.00
6 Designing the
Shed
$3,200.00
7
Developing
a design for the
shed as per
requirements of
Mr. Jones
5 8 hrs Contractor Fred ,Designer
Karen
$2,360.00
8
Sharing the
design with
client for
approval
7 2 hrs Contractor Fred , Planner
and subcontractors
$470.00
9
design
approval and
preparation for
next phase
8 2 hrs Contractor Fred $370.00
10 Preparing the
site
$2,190.00
11
Checking
the service cable
underground
9 7 hrs Construction Workers,
Planner and subcontractors
$700.00
12
Site
clearance after
locating the
boundaries of
the site
11 5 hrs Surveyor, Construction
Workers, Planner and
subcontractors
$890.00
13
Temporary
site facilities
installation
12 12 hrs Construction Workers $600.00
14 Implementing
the Project
$15,985.00
15
Booking of
council
inspection for
starting
excavation
works
13 1 hr Council Inspector,
Contractor Fred ,Team
members
$325.00

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MANAGE PROJECT COST
16
Booking
truck for
concrete
15 1 hr Concrete truck
[1],Contractor Fred ,
Planner and subcontractors
$10,235.00
17
Planning
shed installation
and power
supply
16 1 hr Contractor
Fred ,Subcontractor Eddie(
electrician)
$255.00
18
receiving of
second
installment of
payment
17 2 hrs Contractor Fred $370.00
19 Construction
of the Shed 18 48 hrs Construction Workers,
Planner and subcontractors
$4,800.00
20 Shed
Installation
$4,060.00
21
Setting up
main powers for
the shed
prepared
19 10 hrs Subcontractor
Eddie( electrician)
$700.00
22 Working on
water supply 21 10 hrs Subcontractor
Bob(Plumber),Constructio
n Workers
$1,200.00
23 Working on
toilet installation 22 12 hrs Construction Workers,
Subcontractor
Bob(Plumber)
$1,440.00
24 Building the
windows 23 6 hrs Subcontractor
Gary( Glazier),Constructio
n Workers
$720.00
25
Clearing the
Site and
Project
Handover
2.75
days
$12,720.00
26
Rubbish and
temporary
amenities
removal
24 6 hrs Construction Workers,
Concrete truck [1]
$10,300.00
27
Preparation
and drafting the
final Bill
26 2 hrs Planner and subcontractors $100.00
28 Documentation 27 2 hrs Planner and subcontractors $100.00
29 Resource 28 5 hrs Contractor Fred $925.00

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MANAGE PROJECT COST
release
30 Payment
completion 29 6 hrs Contractor Fred $1,110.00
31
Handing
over the shed
keys
30 1 hr Contractor Fred $185.00
Table 1: The budget prepared for the Project
(Source: Created by Author using MS Project)
The work breakdown structure of the project is illustrated below (Larson & Gray 2013)-
0
1 2
2.1
2.2
2.3
3
3.1
3.2
3.3
4
4.1
4.2
4.3
5
5.1
5.2
5.3
5.4
5.5
6
6.1
6.2
6.3
6.4
7
7.1
7.2
7.3
7.4
7.5
7.6
7.7
8
Fred's Shed Construction
$40,000.00 274 hours
Project starts
$0.00 0 hours
Requirement Analysis and
Project Planning
$1,845.00 18 hours
Site inspection and setting
up a meeting with Mr Jones
for design requrements of
the shed
$705.00 6 hours
Estimation of the
materials needed and
sharing the estimation
with Mr. Jones
$940.00 8 hours
Documentation and
payement received for
staring the work
$200.00 4 hours
Designing the Shed
$3,200.00 22 hours
Developing a design for
the shed as per
requirements of Mr. Jones
$2,360.00 16 hours
Sharing the design with
client for approval
$470.00 4 hours
design approaval and
preparation for next
phase
$370.00 2 hours
Preparing the site
$2,190.00 41 hours
Checking the service
cable underground
$700.00 14 hours
Site clearance after
locating the boundaries of
the site
$890.00 15 hours
Temporary site facilities
installation
$600.00 12 hours
Implementing the Project
$15,985.00 105 hours
Booking of council
inspection for starting
excavation works
$325.00 3 hours
Booking truck for
concrete
$10,235.00 2 hours
Planning shed installation
and power supply
$255.00 2 hours
receival of second
istallement of payment
$370.00 2 hours
Construction of the Shed
$4,800.00 96 hours
Shed Installation
$4,060.00 66 hours
Setting up main powers
for the shed prepared
$700.00 10 hours
Working on water supply
$1,200.00 20 hours
Working on toilet
installation
$1,440.00 24 hours
Building the windows
$720.00 12 hours
Clearing the Site and
Project Handover
$12,720.00 22 hours
Rubbish and temporary
amneties removal
$10,300.00 6 hours
Preparation and drafting
the final Bill
$100.00 2 hours
Documentaion
$100.00 2 hours
Resource release
$925.00 5 hours
Payment completion
$1,110.00 6 hours
Handing over the shed
keys
$185.00 1 hour
Client sign off
$0.00 0 hours
Project ends
$0.00 0 hours

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MANAGE PROJECT COST
Figure 1: The work breakdown structure of the Project
(Source: Generated by author using MS Schedule Pro)

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MANAGE PROJECT COST
Figure 2: Representing the Gantt chart of the project
(Source: Generated by author using MS Project)

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MANAGE PROJECT COST
The human resources required for this project are as follows-
1. Designer Karen- This resource is responsible for designing the shed for Mr. Jones
2. Construction Workers- The workers will be responsible for digging the land and setting
up the shed.
3. Subcontractor Eddie( electrician)- Eddie is responsible for setting up the electric
connection in the shed
4. Contractor Fred- Fred will be performing the role of project manager as well.
5. Subcontractor Bob(Plumber)- Bob will be responsible for the connecting the water and
installing the toilet in the shed.
6. Subcontractor Gary( Glazier)- Gary will be responsible for installing the windows of the
shed
7. Council Inspector- Council inspector is hired for site inspection.
8. Surveyor- Surveyor is needed for the land survey
9. Planner and subcontractors- They are responsible for performing the works according to
the order of the contractor.
Project 2
There are different types of budgets providing accounting information that can be used in
managing projects. However, there are five major accounting budgets that can be effectively
used in project management (Fleming & Koppelman, 2016). These are master budget, operating
budget, financial budget, cash flow budget and static budget.
2.1. Master Budget
Area

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MANAGE PROJECT COST
Master budget is applicable for company’s overall budget as it is aggregate of the
individual budget of a company.
Primary Function
It combines the different factors such as sales, operating expenses and assess of a
company to evaluate the overall performance of an organization or a project.
Supported by Data from-
It is supported by the data from the sales, assets and operations department.
Users
Users of this budget include the financial and cost management department of an
organization. This budget method can be used for managing the complex projects as it gives a
detailed view about the costs and finances associated with a project.
2.2. Operating Budget
Area
The budget deals with the income statement elements, which includes revenues and
expenses.
Primary Function
This budget mainly forecasts and analyzes the projected income and the associated
expenses, estimated over a certain period of time.
Supported by Data from-

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MANAGE PROJECT COST
In order to increase the accuracy of the operating budget, it takes an account of the
different factors and data from sales, production, labor and material costs.
Users
A manager of the company mainly makes use of an operating budget. A project manager
can also make use of the operation budget in order to calculate the material, labor and overhead
costs associated with a particular project. Operating budgets can be created on a weekly, monthly
or a yearly basis, whichever might be suitable for a company or a project. A project manager can
compare the different operational reports prepared to check whether there is overspending on the
resources of a project or the materials.
2.3. Financial Budget
Area
Financial budget is mainly based on the area of asset management and cash flow.
Primary Function
A financial budget is mainly established in order to understand the financial health of the
company by presenting a comprehensive overview of the company’s spending. A financial
budget is mainly used determine the value of a public stock offering or merger projects.
Supported by Data from-
The financial budgets are mainly supported by the data from the company’s or project
assets. It mainly deals with the expected assets of a company, liabilities and stakeholders’ equity
(Askin & Askin, 2012).

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MANAGE PROJECT COST
Users
Financial budgets are mainly used in a software companies. It can be used by the project
manager as an element of the stakeholders’ management plan (Brigham & Houston, 2012).
2.4. Cash Flow Budget
Area
Cash flow budgets are prepared for determining the process in which the cash comes in
and flows out of a business or project within a particular time (Maravas & Pantouvakis, 2012).
Primary Function
The main function of the cash flow budget is to calculate the costs and expenditure
associated with a particular project. It helps in understanding the process of managing costs more
wisely.
Supported by Data from-
The data can be supported by the different factors such as accounting payable and
receivable for accessing the overall expenditure of a company.
Users
Any company or business can access the cash flow budget of the company for
determining and planning the project expenditure and cost budget. For example a construction
company or a construction manager can make use of the cash flow budget for proper scheduling
of the project work.

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MANAGE PROJECT COST
2.5. Static Budget
Area
It can be applicable to any small size projects or company.
Primary Function
Static budget is used when a cost set up for a project or product cannot be altered.
Supported by Data from-
The static budget of the data can be supported by the operations, administrative and the
general marketing department of the company.
Users
The users of static budget include the management of a company and production
department. The project manager of small projects can make use of the static budget for
implementing a project within a set schedule and cost determined for the project.

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MANAGE PROJECT COST
Observation Report
Description Comments Satisfactory
Determination of resource
requirements
It is done after thorough
inspection of the site

Estimation of Project cost and
budget
Done in initiation phase of the
project after undergoing proper
resource analysis and
requirements analysis

Developing a Cost management
Plan
Meetings are held in order to
develop the plan

Demonstrate interpersonal skill
required for working in team
Communication plan made
makes it easier to works in a
team environment

Development of Financial
management process
It was required for proper project
execution

Use of cost analysis method The project performed proper
cost analysis before budget
selection

Action to maintain financial
objectives
The project manager did not take
proper actions
Preparation of accurate financial
reports
Project manager is responsible
for preparation of financial
reports


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MANAGE PROJECT COST
Use of software for preparing
financial reports
Scheduling and budgeting
software were used

Describing the process used to
complete the financial
management of a project
Proper financial management
were performed

Determining the effectiveness of
cost management from project
outcome record
This task is yet to be performed
Reviewing the cost management
issues and document
improvement
This task is not performed.
Proper project management standards are to be used while implementing the project as this
project is to be completed within a constricted schedule of 2 weeks (Kerzner & Kerzner, 2017).
Use of proper project management tools and techniques will ensure successful completion of the
same.