Chapter 5 Flashcards Preview

Intro to Project Management > Chapter 5 > Flashcards

Flashcards in Chapter 5 Deck (12):
1

Estimating

The process of forecasting or approximating the time and cost of completing project deliverables.
The task of balancing expectations of stakeholders and need for control while the project is implemented.

2

Estimating Projects

To support good decisions.
To schedule work.
To determine how long the project should take and its cost.
To determine whether the project is worth doing.
To develop cash flow needs.
To determine how well the project is progressing.
To develop time-phased budgets and establish the project baseline.

3

Estimating Guidelines for Time, Costs, Resources

Have people familiar with the tasks make the estimate.
Use several people to make estimates.
Base estimates on normal conditions, efficient methods, and a normal level of resources.
Use consistent time units in estimating task times.
Treat each task as independent, don’t aggregate.
Don’t make allowances for contingencies.
Adding a risk assessment helps avoid surprises to stakeholders.

4

Top-Down Estimates (macro)

Are usually are derived from someone who uses experience and/or information to determine the project duration and total cost.
Are made by top managers who have little knowledge of the processes used to complete the project.

5

Bottom-Up Approach (micro)

Can serve as a check on cost elements in the WBS by rolling up the work packages and associated cost accounts to major deliverables at the work package level.

6

Estimating Projects: Preferred Approach

Make rough top-down estimates.
Develop the WBS/OBS.
Make bottom-up estimates.
Develop schedules and budgets.
Reconcile differences between top-down and bottom-up estimates

7

Level of Detail

Level of detail is different for different levels of project management.
Level of detail in the WBS varies with complexity of the project.
Excessive detail is costly.
Fosters a focus on departmental outcomes
Creates unproductive paperwork
Insufficient detail is costly.
Lack of focus on goals
Wasted effort on nonessential activities

8

Types of Costs

Direct Costs
Direct (Project) Overhead Costs
General and Administrative Overhead Costs

9

Direct Costs

Costs that are clearly chargeable to a specific work package.
Labor, materials, equipment, and other

10

Direct (Project) Overhead Costs

Costs incurred that are directly tied to an identifiable project deliverable or work package.
Salary, rents, supplies, specialized machinery

11

General and Administrative Overhead Costs

Organization costs indirectly linked to a specific package that are apportioned to the project

12

Refining Estimates

Reasons for Adjusting Estimates
Interaction costs are hidden in estimates.
Normal conditions do not apply.
Things go wrong on projects.
Changes in project scope and plans.

Adjusting Estimates
Time and cost estimates of specific activities are adjusted as the risks, resources, and situation particulars become more clearly defined.