Project Planning: Cost and Quality Management Planning

This article discusses the cost and quality management planning for a construction project. It includes estimated costs, cost baseline budget, worst case scenario, contingency, missing costs, contractors, materials quality, managing human resources, and change management.

Running Head: PROJECT PLANNING
Project Planning
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Cost Management Planning
The project cost estimate is shown in the following table.
Resource/Requirement Estimated Cost
Land Costs $600,000
Building Costs $7,000,000
Interior Development Costs $500,000
Site Improvements and Other Costs $600,000
Contract Payments and Workers’ Wages $800,000
Plumbing, Electric Wiring Costs $300,000
TOTAL $9,800,000
The cost baseline budget of the project is estimated as follows.
Requirements Budget
Land Procurement and Legal Licensing $800,000
Salary and Contracts Budget $1,000,000
Construction Materials and Cost Budget $8,000,000
Interior Development Budget $1,000,000
Additional Budget (including contingency) $1,000,000
TOTAL $11,800,000
The above two tables show the estimated costs for the project and the estimated baseline
budget that is required for the project. There is a significant difference between the two – the

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baseline budget is an estimated value by considering worst case scenarios, maximum possible
costs and contingencies. On the other hand, the estimated costs include the values that are
deduced from the current costs and possible good case scenarios for the preparation of a financial
plan (Goetsch & Davis, 2014). The baseline budget is prepared so that an overall idea for the
possible cost of the project can be gathered whereas the estimated costs give the idea about the
possible costs of the project in the current market condition and contract requirements. For
finding both of the two, several project management tools have been utilized. For initial cost
estimation, project scheduling technique has been utilized with the help of Microsoft Project
Software. This software can be used to develop the schedule of the project and assign resources
(human or material) to each of the activities. The software can automatically estimate the costs if
the standard rates of the resources are entered (Chen & Luo, 2014). However, the estimated costs
are generally inaccurate and do not reflect the true values of budget required for the project.
Furthermore, during cost estimation, only the main costs that are directly attached with the
project are considered without additional costs and contingency budget. For the analysis and
determination of the estimated baseline budget, several aspects have been considered as follows:
Worst Case Scenario – This is for determining the project costs if all the aspects of
expenses are of the maximum value. For instance, while determining the costs of the building
framework materials, the maximum prices that might be charged by the vendor for the materials
are considered (Khodakarami & Abdi, 2014). The worst case scenario is also considered for
contract payments as they may increase if certain terms and conditions are not met by the
organization.
Contingency – Determination of contingency is one of the most critical factors in
determining project baseline budget. All possible accidental incidents are considered and

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possible extra costs are calculated. These extra values are then added to the main budget.
Without this contingency budget, the organization may not be able to recover from the accidental
incidents as the sponsors may not provide additional funds while the project is ongoing.
Missing Costs – During the cost estimation, some important costs get missing that are not
directly attached to the project but can seriously affect the project (Lee, Kim & Yu, 2014). For
instance, licensing costs, expenses for court cases regarding land ownership and building rights
and others may incur high expenses for the organization and hence, these factors are considered
while determining the project baseline budget.
In this project, both of the two have been considered for determining the possible current
costs and worst possible case scenario. During the cost estimation process, all the possible
factors have been considered whereas during determination of the cost baseline, the additional
factors and contingencies have been calculated as well.
Quality Management Planning
Quality management planning is another critical factor for determining the success of the
project. This is mainly because, not only the best possible outcome of the project is desired, the
project sponsor will also expect the best quality outcome of the project so that they can earn
significantly high return on investment in the project (Park et al., 2013). Without assurance of
high return on investment, the sponsor will not provide the funds for the project and it will
slowly turn into a failure. Hence, a quality management plan is required that will ensure
sufficient quality is obtained from the project. Given the sponsor provides approval; the
organization can use additional funds for the improvement of the project if the standard quality

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demands so. While preparing the quality management planning, the project manager should
consider the following factors seriously.
Contractors – Contractors, especially for large scale constructions, play very important
roles in determining the quality of the project outcome. Some contractors always try for the best
output by application of highly efficient manpower and high quality materials whereas some
contractors do the opposite – they buy poor quality materials from the vendors who provide them
with commission as well as appoint low cost inefficient work force (Harris & McCaffer, 2013).
As a result, the quality of the building automatically falls in addition to bringing a set of
dangerous risks for the building tenants and neighbors. Hence, during the tender process, the
project manager should undertake background check on the highest bidder before handing over
the project contract to the contractor. Furthermore, the quality of human resources available to
the project contractor should also be checked.
Materials Quality – Quality of materials must be high in order to enhance the quality of
the building to be built in this project. Some organizations do not pay much attention to the
quality of materials as they continue to procure materials from one selected vendor with whom,
they have a good relationship. However, this is not desired and the organization has to change
vendors if the existing vendor continues to provide poor quality materials (Kim et al., 2016). One
suggestion to ensure the material quality is to procure them from the vendors on basis of
contracts. One of the contract terms should strictly state that the vendor will not receive further
payments if the quality of materials provided are not standard or satisfactory. In addition, when a
set of materials are procured, a quality check should be conducted before they actually used in
the project.

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Managing Human Resources – Management of human resources is also important in
determining the quality management plan of a project. Some organizations deploy cheap and
inefficient working human resources who not only take huge amount of time for completing the
construction work but also provide poor quality outcomes. Some organizations in some countries
also deploy child labour, which is illegal. Before starting the project, the organization should
ensure highly efficient manpower is deployed in the project even it means exceeding the
payment budget (Schwalbe, 2015). For additional payments budget, the company needs to
convince the sponsor that it is necessary for maintaining and enhancing the quality of the project.
Furthermore, monitoring of the workers’ activities is also needed to ensure that workers are not
spending time by not doing any significant activity for the project.
Change Management – It is the duty of the project manager to monitor and change the
project in order to enhance its quality. In some projects, due to additional activities or any
unforeseen activities or scope creep, change management is required so that the project is
brought back on track (Crawford, 2014). It is the duty of the project manager to find suitable
ways for change management so that the right types of changes are implemented at the right
time.

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References
Chen, L., & Luo, H. (2014). A BIM-based construction quality management model and its
applications. Automation in construction, 46, 64-73.
Crawford, J. K. (2014). Project management maturity model. CRC Press.
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper
Saddle River, NJ: pearson.
Harris, F., & McCaffer, R. (2013). Modern construction management. John Wiley & Sons.
Khodakarami, V., & Abdi, A. (2014). Project cost risk analysis: A Bayesian networks approach
for modeling dependencies between cost items. International Journal of Project
Management, 32(7), 1233-1245.
Kim, T. H., Park, S. H., Hwang, S. I., Yang, J., Lee, J. Y., & Hwang, J. B. (2016). Strategic
environmental impact assessment proposal in consideration of the complex
characteristics of the soil-Around the dam construction long-term plan. Journal of
Environmental Impact Assessment, 25(1), 51-62.
Lee, S. K., Kim, K. R., & Yu, J. H. (2014). BIM and ontology-based approach for building cost
estimation. Automation in Construction, 41, 96-105.
Park, C. S., Lee, D. Y., Kwon, O. S., & Wang, X. (2013). A framework for proactive
construction defect management using BIM, augmented reality and ontology-based data
collection template. Automation in Construction, 33, 61-71.
Schwalbe, K. (2015). Information technology project management. Cengage Learning.