St. Dismas Assisted Living Facility: Project Cost Management Report

This report focuses on cost management within the context of project management, specifically addressing the challenges and methods of cost estimation. It begins by contrasting manual cost estimation with more advanced techniques, highlighting the inaccuracies of the former and the efficiency of the latter, particularly for large-scale projects. The report then delves into bottom-up estimation, emphasizing its prevalence and practicality, especially when using project management software such as Microsoft Project. The methodology involves scheduling activities, adding resources, and allocating these resources to work packages. Through examples, the report illustrates how to schedule activities, define resource types (human, material, and work), set standard rates, and allocate resources to work packages to accurately estimate project costs. The report also references several project management resources to support the discussion.

Running Head: PROJECT MANAGEMENT
St. Dismas Assisted Living Facility
Name of the Student
Name of the University

1PROJECT MANAGEMENT
Part B
Cost management planning can be done in various methods. The first method is the
manual cost estimation method in which the overall costs including material costs, contract fees,
overall wages and others. However, this method is most of the time is inaccurate and not suitable
for large scale projects (Walker, 2015). This is mainly due to cost variance and changes in
standard rates during the course of the project that are not considered in this estimation.
Furthermore, in this type of estimation, the resources are not properly allocated in different
phases of the project and hence, very inaccurate results are obtained.
However, some advanced cost estimation techniques have since been developed that are
much more accurate and easy. Two of the techniques are known as bottom up estimation and top
down estimation. Of these two, bottom up estimation is the most common technique that is being
utilized in project management (Schwalbe, 2015). The main benefit of this technique is that it
can be done simply using a project management scheduling software by allocating various
resources to each of the work packages of the project. The most software that is being is used for
the purpose in Microsoft Project. This is a very efficient tool for cost estimation as it also
considers cost variations and even partial allocation of resources in a particular work package.
The generally followed technique for cost estimation using this software is as follows.
Schedule Activities: First, the list of activities is inserted and the respected project phases
are added. Based on the requirement of the project phases and work packages, the work packages
are scheduled that includes total number of days / hours of work and total duration within the
project (Fleming & Koppelman, 2016). This is possible by linking all the work packages based

2PROJECT MANAGEMENT
on a specific arrangement and predecessors. Based on these links, the durations of the project
vary significantly. Example:
Task Name Duration Start Finish Predecessors
Phase 1 95 days Wed 01-03-00 Tue 11-07-00
Excavation 20 days Wed 01-03-00 Tue 28-03-00
Foundation 75 days Wed 29-03-00 Tue 11-07-00 4
Phase 2 113 days Wed 19-04-00 Fri 22-09-00 3FS-60 days
Steel Structure 40 days Wed 19-04-00 Tue 13-06-00
Concret Structure 73 days Wed 14-06-00 Fri 22-09-00 7
Phase 3 Enclosure 134 days Wed 12-07-00 Mon 15-01-01 3
Masonry 40 days Wed 12-07-00 Tue 05-09-00
Windows 50 days Wed 06-09-00 Tue 14-11-00 10
Roof 44 days Wed 15-11-00 Mon 15-01-01 11
Add resources: The second step is to add resources in the resource sheet of the software.
These resources include human resources, material resources and work resources that are
relevant for the project (Kerzner & Kerzner, 2017). With these resources, the standard rates are
set based on the current market value. For the human resources, the unit of the rate is

3PROJECT MANAGEMENT
currency/hour of work while the cost of material resources is accepted in cost/unit. Costs for
work resources cannot be set and has to be done manually in after allocation of the same in a
work package. Example:
Resource
Name
Type
Materia
l Label
Initial
s
Grou
p
Max.
Units
Std. Rate
Ovt.
Rate
Cost/
Use
Accrue
At
Base
Calenda
r
CFO;Legal;V
P Mktg
Work C 100%
$350.00/
hr
$0.00/
hr
$0.00 Prorated Standard
Splient Work S 100% $75.00/hr
$0.00/
hr
$0.00 Prorated Standard
COO
Wor
k
C
100
%
$100.00/
hr
$0.00/
hr
$0.00
Prorate
d
Standar
d
COO;Dr.
Link
Work C 100%
$125.00/
hr
$0.00/
hr
$0.00 Prorated Standard
Dr. Link
Wor
k
D
100
%
$75.00/hr
$0.00/
hr
$0.00
Prorate
d
Standar
d
Chief
Engineer
Work C 100%
$100.00/
hr
$0.00/
hr
$0.00 Prorated Standard
Legal Work L 100% $50.00/hr $0.00/ $0.00 Prorated Standard

4PROJECT MANAGEMENT
hr
Allocate Resources: Finally, in the last phase, the resources are allocated to each of the
work packages of the project. One work package may have one or more resources allocated to it
but in order keep the duration of the work same, the work portions for each of the resources are
reduced (Binder, 2016). Again, in order to decrease the number of resources from a work
package keeping the duration same, the work for the staying resources increase significantly.
Based on these allocations of resources, the software is able to estimate the costs at each of the
work package and deliver an accurate total budget easily. Example:
Task Name
Duratio
n
Start Finish
Predecessor
s
Resource
Names
Cost
Operational
Implement...
344 days
Mon 02-
08-99
Thu 23-
11-00
$393,400.00
Management/
Organization...
87 days
Mon 02-
08-99
Tue 30-
11-99
CFO;Legal;VP
Mktg
$243,600.00
Recruit & Hire
Execute...
88 days
Mon 02-
08-99
Wed 01-
12-99
Splient $52,800.00
Recruit 47 days
Mon 02-
08-99
Tue 05-
10-99
$0.00

5PROJECT MANAGEMENT
Hire 40 days
Wed 06-
10-99
Wed 01-
12-99
4 $0.00
candidate
selection
20 days
Wed 06-
10-99
Wed 03-
11-99
$0.00
contract sign 20 days
Thu 04-
11-99
Wed 01-
12-99
6 $0.00
Interior Design
issues de...
20 days
Mon 02-
08-99
Fri 27-08-
99
COO $16,000.00