Project Cost Management Report: Leadership Conference Analysis

This report delves into the critical aspects of project cost management, providing a comprehensive analysis of budgeting, cost estimation, and control methodologies. It begins by defining project budgets and outlining the key objectives of budgeting in project management, along with the main steps involved in the budgeting process. The report emphasizes the importance of key performance indicators (KPIs), milestones, and budgetary control. It explores the use of spreadsheets for budget development and explains two methods for conducting project cost estimation: expert judgment and parametric estimating. Furthermore, the report discusses Earned Value Management (EVM), project cost management, and the role of cost plans in managing costs. It details the change request process and two methods for measuring costs against project outcomes: variance analysis and cost analysis. The responsibilities of a project manager in relation to cost management are also outlined. The second part of the report focuses on preparing a cost management plan for a conference, including resource requirements, major project costs, and potential causes of cost increases. The report then outlines project cost control procedures, such as resource planning, cost estimation, and cost budgeting. Finally, the report provides an analysis of income, expenses, and variance, along with recommendations for cost reduction strategies.

Manage project cost

Contents
MAIN BODY..............................................................................................................................................3
TASK 1...................................................................................................................................................3
TASK 2...................................................................................................................................................7
TASK 3.................................................................................................................................................10
REFERENCES..........................................................................................................................................12

MAIN BODY
TASK 1
Discuss the key purpose and objectives of budgeting in project management
A Project Budget is the cumulative number of financial money distributed for a particular span
of time for various project objectives (Bonoli, Natili and Trein, 2019). Project budget
management is designed to forecast and monitor project expenses under the budgeted amount
and to meet the project's specified objectives.
Outline the main steps in the budgeting process for a project
Step 1: Set Achievable Targets.
Step 2: Classify your Revenue and Expenditures.
Step 3: Wants and desires independently.
Step 4: Project the Budget.
Step 5: Bring into motion your strategy.
Step 6: Seasonal prices.
Step 7: Glance back.
Why key performance indicators are used in budgeting
An important way to keep track of the financial wellbeing of an organization can be a
performance measure, or KPI, for financial planning. KPIs are metrics from which, over a given
period of time, a business can track its success. KPIs also help prepare potential spending for an
organization. The example of KPI is cost indicator, revenues, variances.

Explain the use of milestones in budgeting.
Milestones are devices used to mark particular points in a project timetable in managing projects.
These factors which signify links, including the begin and finish date of the project, or a need for
external review or feedback and budget controls. In certain cases, project length is not influenced
by milestones (Kaufman and Covaleski, 2019).
Explain the importance of budgetary control
Budgeting is an integral aspect of all strategy and management practices and is commonly used
by administrators at any level of the enterprise to schedule, track and control multiple operations.
Explain the purpose of using spreadsheets for developing budgets.
It is possible to use spreadsheets to system containing which has been transferred from other
programs. Online data processing systems often do not display information in a way that is easy
to read, or it is impossible to view the information offline (Lei, Nicolau and Wang, 2019). It is
possible to use the data in a spreadsheet to create maps that can then be used for reporting. Users
will construct graphs and charts in a way that is easy to interpret at a glimpse, condensing the
results. It's a great feature and can be great for organization meetings that enable one to display
tones of details in a limited time. The main features of spreadsheet are that it offers accurate
outcome in terms of calculations. As well as spreadsheets contain different formulas for making
calculations which reduce the time and cost.
Explain two methods for conducting project cost estimating.
 Expert Judgment- Expert Judgment is a methodology in which a judgment is given on the
basis of a certain collection of requirements and/or experience gained in a particular field
of information, application or service sector, a particular discipline, a business, etc.

o Advantage- This is useful for getting more number of alternatives for estimating
cost.
o Disadvantage- It may lead to complexity due to more number of perceptions of
experts.
 Parametric estimating- In order to measure an approximation for operation parameters,
such as expense, expenditure, and length, parametric estimation uses a mathematical
correlation between statistical information and other variables ( e.g. square footage in
development).
o Advantage- It offers more accurate estimation.
o Disadvantage- Higher time consumption is an issue.
Explain earned value management
Earned Value Management (EVM) aims to assess project success by project leaders. It is a
structured method in project management used to locate differences in activities focuses on the
findings of the completed employed and the expected work (Choi and Liu, 2019). EVM is used
in the monitoring of costs and deadlines and can be very effective in project forecasting.
Explain project cost management
Project Cost Control is a methodology that uses technologies over the entire life span of
enterprise-level programs to calculate cost and efficiency. PCM covers many basic project
management tasks, including forecasting, task controls, and compilation of field records,
planning, reporting and architecture.
Explain how a cost plan can assist in managing costs.
In general language, the cost management plan analyses how project expenses can be designed,
financed and managed. A cost control strategy generally includes many critical processes to
ensure that the project is carried out within the accepted budget and quality requirements.

The key procedures that should be followed in the event of a cost change process during a
project
Define the Change Request- The method is Shift Management. The paperwork used to apply for
the actual change is a Change Request. So who ever hold the particular request must clarify it so
that it is fully understood by the team to identify it.
Submit and Review the Change Request- It is sent to the project team until the Improvement
Proposal is registered. Here, the method differs from the easy to the structured (a report or
meeting) (a text message or e - mails).
Explain two processes that can be used to measure costs against project outcomes
Variance analysis- In budgeting, the disparity between a budgeted, scheduled or normal expense
and the real value incurred / sold is a variation (Jawerth, 2019). It can be measured for both
expenses and sales.
Cost analysis- Cost estimation is an expense analysis. Expenses used for the processing of
financial reports are not like that is used for operating management. Costs can be manageable or
non-controllable and are prone to lengths of time and limits. Controllable expenses, for instance,
are those that the director can approve
Responsibilities of a project manager in relation to cost management.
 First and foremost, it is the duty of a project manager to devise a strategy to achieve the
project goals while staying true to an established schedule and timetable.
 Tracking of usage of funds.
 Calculating and comparing actual outcome with estimation.
 Making plan to reduce cost of unwanted activities.

TASK 2
Introduction
The method of calculating, allocating, and managing the costs of a project is cost accounting. In
order to minimize the chances of it running over budget, it helps an organization to foresee
coming expenditures. During the planning period of a project, estimated costs are measured and
must be authorized before construction starts. The task is based on preparing the cost
management plan in relation to project of organizing a conference. The conference is about
addressing the role of leadership.
Resource requirements
In order to make cost management plan, there will be need of different kinds of resources
including human resource like accountants, material for cost planning like paper, computer,
excel sheet and many more.
Major project costs
Cost of the project is the cumulative funds required for a people who directly and Indirect Cost
plan or job to be done. Project costs are all investments that are incurred or supposed to be
announced, or financial commitments that are imposed or expected to be incurred to finish the
project that are specified in the context of the plan (Chu, 2020).
Particulars Amount ($)
Venue cost
Rental cost 42000
Cost of audio visual
equipments
microphones 3000
projectors 25000

screens for projecting 15000
electronic whiteboard 20000
Catering charges 19000
Speakers 20000
Marketing cost
Digital marketing 10000
Mass media advertising 15000
Direct marketing 19000
database marketing 22000
Sales promotion 12000
Sponsorship marketing 21000
243000
Potential causes of increases in costs
 Inaccurate project estimates- While all of the stakeholders in the project are excited to see
the construction of the project underway, if you already have faulty budget plan to
proceed with, the project will be heading for a failure since day one.
 Project design error- In the other side; even though users devote sufficient time and
money in the construction process preparation stage for correct expenditure and
scheduling forecasts, if user concept proposals are inaccurate, it would eventually be
planned for cost overruns in development projects.
 No planning for change orders- Alteration instructions are another very important cause
for cost overruns in building programs, often in association with design defects. A change
order happens when an owner or supplier recognizes that a concept does not work or may
attempt to implement new features, fixes or conditions following implementation of
original models and budgets.
Project cost control procedures

Resource planning The method of deciding possible resource needs for
an entity or a task scope is research reports. It
requires the estimation and preparation of the use of
the physical, human, material and financial tools
needed to accomplish the tasks of the job and its
tasks. Many operations include using persons to do
jobs.
Cost estimation Cost estimation is the effectively respond used to
measure the capital needed by the scale of an
investment option, operation, or initiative, cost, and
price (Aranda, Arellano and Davila, 2019). It entails
the use of strategies that translate quantified
technological and programmatic knowledge on an
asset or project into data on financing and capital.
The projected results are mostly used as indicators
for strategic forecasting, expense estimation and
decision-making, or for cost of the project and budget
management processes.
Cost budgeting Budgeting is an assessment post-process used to
assign the expected cost of services into cost
accounts against whatever cost efficiency can be
calculated and analysed. For cost management, this
forms the foundation. The cost accounting method
also must endorse actual costs used by the table of
accounts. In compliance with the timetable,
expenditures are also way-phased or to overcome
expenditure and cash flow restrictions.

TASK 3
Introduction
In this part of report is related to expenses and total income in the context of conference
planning. This has been done in accordance of prepared financial plan. Below analysis of income
and expenses has been done in such manner that is as follows:
Income $395000
Expense $243000
Profit/loss $152000
Evaluation: On the basis of above table, this can be found out that total income is of $395000
and expenses are of $243000. The value of profit is of $152000 that is computed by making
variation of income and expenses. The above outcome shows that company is able to produce
higher profit.
Variance analysis: Analysis of variance is the analysis of variations in financial planning or
management accounting of real activity versus expected or anticipated behavior (Lebreton, Egger
and Slat, 2019). This is basically on how the disparity between current and expected behaviors
reveals how company success is being influenced. In financial planning, the disparity between a
budget period, scheduled or normal expense and the real value accrued / sold is a variation. On
all expenses and sales, variances may be calculated. In the context of above project, analysis of
variance is done in such manner that is as follows:
Particulars
Actual amount
($)
Estimate
d Variance %
Venue cost
Rental cost 42000 $50,000 $8,000 16.00
Cost of audio visual
equipments $0
microphones 3000 $5,000 $2,000 40.00

projectors 25000 $19,000 ($6,000) -31.58
screens for projecting 15000 $12,000 ($3,000) -25.00
electronic whiteboard 20000 $17,250 ($2,750) -15.94
Catering charges 19000 $20,000 $1,000 5.00
Speakers 20000 $18,000 ($2,000) -11.11
Marketing cost $0
Digital marketing 10000 $8,000 ($2,000) -25.00
Mass media advertising 15000 $12,000 ($3,000) -25.00
Direct marketing 19000 $15,000 ($4,000) -26.67
database marketing 22000 $20,000 ($2,000) -10.00
Sales promotion 12000 $14,000 $2,000 14.29
Sponsorship marketing 21000 $20,000 ($1,000) -5.00
243000 230250
($12,750
) -5.54
On the basis of above table, this can be find out that actual cost is of $243000 and estimated cost
is of $230250. This shows that company failed to manage the overall cost as compared to
estimated cost in an effective manner. As well as there is more number of activities that is
resulting in negative variances. On the other hands, venue cost is under positive variance.
Recommendation:
On the basis of above analysis, this can be recommend to above company that they should focus
on reducing overall cost of different operations. It can be done only by help of proper cost
estimation. In order to do so proper method of cost estimation can be applied. Apart from this,
the manager of project need to focus on those cost activities which are resulting in higher
unwanted cost.

REFERENCES
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