Fundamentals of Alternative Investments

FUNDAMENTALS OF
PROJECT
MANAGEMENT- Cost and Finance

INTRODUCTION
 Cost estimation is mainly carried out for the purpose
of estimating approximates that are associated with
a project’s probable cost.
 With the help of a proper cost estimation process it
becomes easy to estimate the overall budget that
will be needed for completing the project.
 The key principles that are associated with cost
estimation process are offering better integrity
towards the data, managing the information
accuracy and ensuring that all the uncertain risks are
identified at the early stage so that it becomes easy
to remove the issues.

PROJECT COST TYPES
 While developing a project it becomes
essential to ensure that the project costs
are determined and calculated efficiently
so that it becomes easy to ensure that
the multi storey car parking has designed
successfully for the purpose of benefiting
the developer.
 The project cost types are mainly divided
into three variable and fixed costs, direct
and indirect costs and opportunities.
 With the help of proper cost analysis it
will become easy to determine the actual
cost associated with the project.

MAIN PROJECT COST ELEMENTS
 Base cost
 Contingencies
 Financial changes during implementation

METHOD OF COST
ESTIMATION
 Cost estimation is essential for every project as
this helps in identifying the key resources that
are needed for completing a task along with all
the necessary project activities.
 There are several methods for estimating the
cost. This typically includes analogous
estimating, bottom up estimating, expert
judgment, three point estimating and
parametric estimating.

METHOD OF COST
ESTIMATION
 Bottom up estimation process is selected for the multi storey car parking
area because it offers a way of estimating every single activity that takes
place within the estimated project.
 The key reason behind using the bottom up estimation is that it offers high
accuracy and precision.
 With an efficient approach it becomes easy to manage the budget that will
be needed for carrying out the overall project.

BUDGET FOR THE PROJECT
Task Name Duration Start Finish Cost
multi storey 100 days Tue 1/14/20 Mon 6/1/20 $170,000.00
Phase 1: Initiation phase 23 days Tue 1/14/20 Thu 2/13/20 $4,160.00
developing business case 6 days Tue 1/14/20 Tue 1/21/20 $1,200.00
feasibility study 4 days Wed 1/22/20 Mon 1/27/20 $960.00
designing project team 5 days Tue 1/28/20 Mon 2/3/20 $400.00
requirement analysis 5 days Tue 2/4/20 Mon 2/10/20 $1,000.00
Reviewing the phase 3 days Tue 2/11/20 Thu 2/13/20 $600.00
Phase 2: Planning phase 21 days Fri 2/14/20 Fri 3/13/20 $2,840.00
project planning 8 days Fri 2/14/20 Tue 2/25/20 $640.00
resource planning 4 days Wed 2/26/20 Mon 3/2/20 $480.00
financial planning 5 days Tue 3/3/20 Mon 3/9/20 $600.00
developing communication plan 4 days Tue 3/10/20 Fri 3/13/20 $1,120.00
Phase 3: Blue print 14 days Mon 3/16/20 Thu 4/2/20 $53,816.00
identifying the location 4 days Mon 3/16/20 Thu 3/19/20 $1,440.00
developing the design 4 days Fri 3/20/20 Wed 3/25/20 $51,152.00
sending design for approval 3 days Thu 3/26/20 Mon 3/30/20 $1,224.00
receiving approval 3 days Tue 3/31/20 Thu 4/2/20 $0.00
Phase 4: Construction 37 days Fri 4/3/20 Mon 5/25/20 $107,224.00
Area selection 6 days Fri 4/3/20 Fri 4/10/20 $1,680.00
Constructing the area for parking 5 days Mon 4/13/20 Fri 4/17/20 $1,440.00
implementing LED lights 7 days Mon 4/20/20 Tue 4/28/20 $51,272.00
LCD at each floor 4 days Wed 4/29/20 Mon 5/4/20 $51,032.00
electric and wiring 10 days Tue 5/5/20 Mon 5/18/20 $1,200.00
installation of CCTV camera 5 days Tue 5/19/20 Mon 5/25/20 $600.00
Phase 5: closure 5 days Tue 5/26/20 Mon 6/1/20 $1,960.00
Reviewing the project 3 days Tue 5/26/20 Thu 5/28/20 $1,560.00
Signing off 2 days Fri 5/29/20 Mon 6/1/20 $400.00

COST AND FINANCE ASSOCIATED WITH THE
PROJECT
 Cost and finance associated with the Multi storey car parking system needs
to be analyzed properly so that it becomes easy to carry out the
performance.
 The estimated one time cost that is associated with the development of the
project is estimated to be around $170,000.

BREAK EVEN ANALYSIS
 Break even analysis is referred
to the financial tool that helps
to determining the stage at
which the project is likely to
offer with the implementation
of the new service.
 The break even analysis is
carried out with the help of
dividing the total fixed costs of
the production by the price per
unit less
 Beside this with the help of
breakeven analysis it becomes
easy to determine the changes
that comes with the
profitability.
1 2 3 4 5
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Break Even Analysis
Total Cost of
Existing
System
Total Cost of
Proposed
System
Year
$ US

COST MANAGEMENT
 It is important to obtain proper endorsements at each
milestones at the development of the project. The
project team members should ensure that proper peer
reviews are conducted so that it becomes easy to
achieve the key milestones.
 The project team must ensure that a good
communication practice is developed among the key
stakeholder and the management team so that it
becomes easy to estimate the key requirements
associated with the project.
 The project document should be updated based on
the base estimate so that it becomes easy to develop
the project based on the scope, cost, schedule and
corresponding budget.

CONCLUSION
 The project of multi storey car parking area is designed with the aim of
offering a better flexibility and accessibility towards the people associated
with the Woodland residential area.
 The project has been designed effectively after analyzing all the necessary
factors.
 It can be stated that with the use of proper cost analysis and estimation
strategy it becomes easy to determine the overall cost that will be needed
for carrying out the project.
 In order to execute the project the calculated expenses cost is around
$170,000.

REFERENCES
 Celli, G., Pilo, F., Pisano, G. and Soma, G.G., 2017. Cost–benefit analysis for
energy storage exploitation in distribution systems. CIRED-Open Access
Proceedings Journal, 2017(1), pp.2197-2200.
 Svensson, L.E., 2016. Cost-benefit analysis of leaning against the wind (No.
w21902). National Bureau of Economic Research.
 Freeman, M., Groom, B. and Spackman, M., 2018. Social Discount Rates for
Cost-Benefit Analysis: A Report for HM Treasury. Available on HM Treasury’s
‘Green Book’website: https://www. gov. uk/government/publications/the-
green-book-appraisal-and-evaluation-in-central-governent.