Developing a Cost Management Strategy for Project Planning and Budgeting

Memo
To: Krystyna Paszkiewicz<Insert Recipient Name>
From: Kaveesha Kittan Godage<Insert Your Name>
Cc: JP Program Director<Insert Name(s)>
Date: 13/11/2022<Insert Date>
Re: Memo<Insert Subject>
Attachments: <List Attachments>
1.Introduction
There are essential steps in developing the cost management strategy, and those steps
are accompanied by equally essential aims and targets. Our goal in developing this
strategy is to provide a comprehensive budget for the project. Initially, the report will
construct a project cost estimating strategy by outlining several cost estimation
techniques, such as Analogues cost estimation, Parametric cost estimation tools, and
bottom-up cost estimation tools. Numerous areas of the national symposia project's
quality management planning and cost management preparation will also be included
in the report.
2.Cost Estimation Tools
2.1 Analogous Cost Estimation
According to (Dionne, 2018) ,an analogous cost estimate is one in which previous
project data is analyzed and used to inform the current endeavor's budgetary planning.
However, the obtained outputs can still be used at a higher level of estimation, which
is particularly important at the early or initial stage of the project when a crucial
decision regarding the continuation or abortion of the project needs to be made(Sartor,
2019).
2.2 Parametric cost Estimation
Another crucial set of tools, the parametric cost estimating tool, is based on past data
much as the one just mentioned. It integrates historical data for the major factors of
cost drivers, such as cost, time, and quantity of work done, and is therefore thought
to be more successful in delivering greater precision than the Analogous estimating
tool. A statistical computation is performed independently for a number of units, and
then those results are multiplied by the entire number of units to provide a rough

estimate of the overall price.
2.3 Bottom-up cost estimation
Bottom-up cost estimate is another important cost estimating approach that involves
breaking down the project into its smallest parts, figuring out how much each part will
cost separately, and then adding those numbers together. As a result of the added
complexity, this method of cost estimating is best employed later in the project's
lifecycle, when budgeting and planning have progressed farther along than at the
outset, when a similar method is used. The breakdown of each procedure into its
component activities allows for accurate cost estimation.
3.Project Cost Estimation
The primary responsibilities associated with the project are prioritized in the project's
cost management strategy and used as the basis for cost estimates. As part of the
project, the location where work will be done must be prepared. The budget for
developing the new system's interiors takes into account the cost to structure all the
demands, as well as the cost of recognizing and analyzing those needs. The total
anticipated cost includes not only the previously listed categories, but also the
expenditures associated with finalizing the worksite, managing services, and bringing
the project to a close.
4.Cost Management Planning Components
Any effective cost management strategy will take into account the following four
factors. You can see the four parts that correspond to the four stages of cost
management planning in the figure we've included below.
Resource Planning
Wells and Kloppenborg (2018) state that at the resource planning stage, the project's
essential sources are identified and their relative costs are calculated. Here, when the
project strategy has been established, the primary resources are analyzed first.
In addition, one might say that the resources of each location in a certain project are
analyzed during this stage of resource planning(Wells & Kloppenborg, 2018).
Cost Estimation
The total cost of a project is determined by adding the costs associated with each
phase. This is where everything takes place in terms of estimating costs. For a rough

estimate of how much the project's materials cost now, it's important to do some
market research. The price of all these resources has been calculated separately.
Cost Budgeting
Once the estimated costs have been finalized, the following step is to create a
realistic budget for the project. Although the capability of the project is used as the
only determinant in developing the budget. For the sake of brevity, let's just say that
it's a sub-process of cost estimates. We estimate how much it will cost to acquire all
of the necessary materials for the project, and then we make a final budget that
takes into account all of the information in the project plan. The time period during
which the resources are utilised is analyzed with the associated costs at this stage.
Cost Control
It is essential for project managers to exercise as much expense control as feasible in
the post-budget estimating session. Due to the unpredictability of risks, it is
common for actual project costs to end up being higher than those originally
projected. Accordingly, it is necessary to implement an appropriate cost regulating
approach in order to prevent cost overlapping.
A Look at What We've Earned
Earned Value analysis, sometimes known as EVA, is a common tool used in
industry for tracking project development over time. It aids in the estimation of
when the project will be finished and how much it will ultimately cost. Earned value
management's primary responsibility, according to Nelson (2017). Planning, actual
cost, and earned value are the three values that must be determined for each task in
the WBS. All these numbers are added together to show whether or not a project is
going to be completed as planned at a certain point in time. Schedule Maker,
RiskTrak, Winsight, Primavera, and Planisware OPX2 are just some of the software
programs that may be used to generate an Earned Value analysis for a
project(Nelson, 2017, p. 11).
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