BSBPMG533 Assessment 1

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M.I.T. & M.S. College, Mardan *

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Nov 24, 2024

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BSB50820 Diploma of Project Management BSBPMG533 Manage project cost Assessment 1 Student name: Apisit Jariyapanyangam Student ID: 180194 Question 1: Outline the main steps in the budgeting process for a project. Step 1 Consider past performance of similar projects Step 2 Assessment of expected trading and operations for the project Step 3 Prepare initial budget estimates for the project Step 4 Adjust estimates based on feedback Step 5 Prepare final budget Step 6 Monitor actual performance against the budget Step 7 Adjust budget during the budget period Question 2: Discuss why key performance indicators are used in budgeting and provide three examples of financial key performance indicators that can be used to determine the effectiveness of a budget. A budgeting key performance indicator, or KPI, can be a useful tool for keeping track of a company's financial health. KPIs are indicators that a firm can use to track its development over a set period of time. KPIs can also assist a corporation in budgeting for the future. Three examples of Financial KPIs:  Employee engagement  Satisfaction  Turnover

Question 3: Explain the use of milestones in budgeting. The Budget Milestones report brings together complex budget data and presents it in simple graphs, tables, and charts. Budget Milestones is an effective method for managing budgets among internal stakeholders, sharing information with line departments, and engaging with the general public. Question 4: Explain the importance of budgetary control. The importance of budgetary control is reflected from the fact that it helps the management to efficiently track the company's performance. Such monitoring ensures that the deviation of the company's actual performance from the budgeted one is always under the scanner and can be rectified before it is too late. Question 5: Explain the purpose of using spreadsheets for developing budgets and two key features of using spreadsheets. The most typical reason for using spreadsheets is to organize and store data such as revenue, payroll, and accounting data. Spreadsheets allow the user to perform calculations and create graphs and charts using the data. Key features of using spreadsheets-  A spreadsheet is made up of columns and rows arranged in a grid.  In spreadsheet software, functions are used to evaluate values and perform various actions. Question 6: Explain two methods for conducting project cost estimating and at least one advantage and disadvantage of each.

Bottom-Up Estimating: A big project is split down into a number of smaller components in bottom-up estimating. The project manager then calculates costs for each of these smaller work packages separately. For example, if a project involves work that will be divided across various departments within a company, expenditures may be broken down by department.  Advantage: o It leads to greater accuracy.  Disadvantage: o It takes too time to be completed. Parametric Estimating: Historical data and statistical modelling are utilized in parametric estimating to assign a financial value to project costs. This method calculates the underlying unit cost for a certain project component and then sells that unit cost as needed.  Advantage: o Higher accuracy  Disadvantage: o It can be time-consuming and costly. Question 7: Explain earned value management and its application in evaluating costs. Earned value management (EVM) is a project management system that measures project performance by combining time, price, and scope. EVM forecasts the future based on anticipated and actual values, allowing project managers to make necessary adjustments. Earned Value Management aids in the analysis of cost and schedule performance, as well as cost and schedule variations. It combines project scope, cost, and schedule metrics to assist the project management team in evaluating and tracking project performance and progress.” Question 8: Explain project cost management and its application in evaluating costs.

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The process of estimating, assigning, and controlling project expenditures is known as cost management. The cost management method enables a company to forecast future expenses in order to avoid budget overruns. Cost estimates are made during the planning stage of a project and must be authorized before construction begins. The cost management method enables a company to forecast future expenses in order to avoid budget overruns. Cost estimates are made during the planning stage of a project and must be authorized before construction begins. Question 9: Explain how a cost plan can assist in managing costs and its use over the project life cycle. A cost plan includes both input cost estimates, or the amount of money that will be spent, and cost output projections, or the amount of money that will be expected to be received. It will give the planning and structure required to keep project expenditures under control and within the parameters of your budget.

Question 10: Explain the key procedures that should be followed in the event of a cost change process during a project.  Cost estimation Begins at project initiation, when you estimate costs to develop the project budget or aim to stay within budget. Cost estimating is an estimate of cost of all the resources that will be needed to complete all the project’s activities.  Budget determination Budget is then allocated based on what you estimated. This is conducted at the planning phase of the project.  Spending control Begins in the project execution stage, where the project budget is tracked to ensure costs are controlled.  Comparison of budget to actual At the end of the project, cost management can be measured through comparing the actual budget against the projected budget. Lessons learned in project cost management can also be determined. Question 11: Explain two processes that can be used to measure costs against project outcomes.  Cost estimation Begins at project initiation, when you estimate costs to develop the project budget or aim to stay within budget. Cost estimating is an estimate of cost of all the resources that will be needed to complete all the project’s activities.  Spending control Begins in the project execution stage, where the project budget is tracked to ensure costs are controlled.

Question 12: Outline the key role and at least four responsibilities of a project manager in relation to cost management.  Estimate total costs  Plan the budget  Monitor spend  Prepare for potential risks Question 13: List three organisational policies and procedures that may apply to cost management in a project environment.  Planning: this includes defining the primary goal(s) of the plan team, how the team intends to achieve the goal(s) and the accessories and/or steps that will be taken to achieve it.  Scheduling: The plan management team should draw the realistic time frame for completing each stage of the plan.  Monitoring: This step happens when the plan is underway and requires the plan teams to analyse how past periods of the plan performed, noting trends and impacts on future plans and communicating those findings to each of the important stakeholders.

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