Manage Project Cost and Finalize Project Cost Management Processes

BSBPMG514 - Manage
project cost

Contents
TASK 1..........................................................................................................................................................3
QUESTION 1.................................................................................................................................................3
QUESTION 2.................................................................................................................................................4
QUESTION 3.................................................................................................................................................5
Two strategies for managing costs and provide two examples of their application................................5
QUESTION 4.................................................................................................................................................5
Select and outline two (2) processes for reviewing costs against outcomes...........................................5
QUESTION 5.................................................................................................................................................6
Outline the key role and at least four responsibilities of a project manager in relation to cost
management...........................................................................................................................................6
TASK 2 Determine Project Cost...................................................................................................................7
(a) Work breakdown structure................................................................................................................7
(b) Consult with stakeholders..................................................................................................................7
(c) Project cost management plan...........................................................................................................8
Budget:..................................................................................................................................................12
TASK 3 Manage project cost and finalize project cost management processes........................................12
3.1 For each scenario.............................................................................................................................12
3.2 For each scenario.............................................................................................................................14
3.3 Change Request...............................................................................................................................14
3.4 Status report....................................................................................................................................16
5. Monitoring implementation..............................................................................................................18
6. Financial completation process.........................................................................................................19
7. Invoicing issues..................................................................................................................................20
8. Lesson Learned..................................................................................................................................20

TASK 1
QUESTION 1
Question Answer
What are the key purpose and
objectives of budgeting in
project management?
The objective of the strategy budget management is to
forecast and coordinate complex expenditures while staying
inside the allocated budget and meeting the project's policy
aims. The procedure of legally recognizing, authorizing, and
repaying the expenditures or expenditures associated with a
project is referred to as project budget management.
List the main steps in the
budgeting process for a project.
There are mentioned main steps of project budget such as:
Step 1: Recognizing project scope
Step 2: Defining resources
Step 3: Assign Amounts
Step 4: Build your budget
Step 5: Obtain approvals and implement
Explain why key performance
indicators are used in budgeting
and provide three examples of
financial key performance
indicators that can be used to
determine the effectiveness of a
budget.
KPIs are measurements that show if sections are meeting the
essential criteria to keep their businesses successful. Future
profit prospects, typical sales throughout a cycle time, and
conversion rates are all examples of relevant KPIs. When
planning with a KPI, employees are held responsible for the
final outcome of this sector of the company. Leaders can
make modifications to business operations until it's too later
by evaluating the financial success over the timeframe
specified in the KPI. There are three examples of KPI for
budgeting:
 Actual cost of work performed
 Deviations from planned budget
 Variations to the planned hours of work

Question Answer
How are milestones used in
budgeting?
Milestones are analysis tools that have been used to designate
certain milestones in a development's timetable. Those
milestones may indicate anchoring like the beginning and
conclusion dates of a work, as well as the requirement for
expert review or participation, as well as budgetary
inspections. In several cases, objectives have no bearing on
project time.
QUESTION 2
Question Answer
Explain two methods for
conducting project cost
estimating and at least one
advantage and disadvantage of
each.
For all undertakings, accurate cost estimates are required. It
would be hard to construct a business strategy, generate
precise budgets, anticipate material requirements, or manage
tasks expenses without even a cost estimate. There are
mentioned two methods of cost estimation:
Expert judgment method: Decision making, supported by
historical data, gives significant environmental knowledge
and data from similar projects.
 Advantage: It is a cheap method
 Disadvantage: Very inaccurate methods
Analogous estimating method: Analogous cost estimation
employs variables from a prior, comparable operation,
including such purpose, budget, funding, and timeframe, or
scale measurements including such length, heaviness, and
intricacy, as the foundation for forecasting its same variable
or statistic for a new work
 Advantage: Similar estimates are produced depends
on the state of time or cost of equivalent past efforts.
As a result, such estimates are based on the squad's

Question Answer
expertise or the proposal's background.
 Disadvantage: One drawback of this strategy is that
the assessment will not always be correct.
Describe earned value
management and its application
in evaluating costs.
EVM (Earned Value Management) is a tool that aids project
managers in assessing project outcomes. It is a methodical
project management approach for identifying program
deviations comparative analysis of work performed vs labor
anticipated. EVA is a quantifiable method for calculating
time and budget variations in order to assess success of a
project.
At what stage of the project
lifecycle would you estimate
cost?
The team will evaluate the cost estimates methodologies and
strategy they will use to develop and implement the budgeted
even during proposal's planning stage.
QUESTION 3
Two strategies for managing costs and provide two examples of their application.
Strategy Outline with two examples/strategy.
Reduce actual cost A high-rated hotel may be completely booked without any
need to promote.
Establish monthly budget Consider all the expenses in systematic manner and exclude
unnecessary expenditure.
QUESTION 4
Select and outline two (2) processes for reviewing costs against outcomes.
Process Outline (30-50 words/process)
Conduct a gap analysis  Examine the scope statement to see how well the