Examining Other Cost Estimating Inputs

All right. ..I've covered the major inputs for cost estimating, but there are still some smaller, common sense inputs that the project manager or the cost estimator will need to rely upon to complete the cost estimating process. Don't worry—it's nothing you've not seen before, and it's all pretty straightforward:

Work breakdown structure The WBS is needed to create a cost estimate, especially the definitive estimate, because it clearly defines all of the deliverables the project will create. Each of the work packages in the WBS will cost something in the way of materials, time, or often both. You'll see the WBS as a common theme in this chapter, because the monies you spend on a project are for the things you've promised in the WBS.

• WBS dictionary The WBS's pal, the WBS dictionary is needed because it includes all of the details and the associated work for each deliverable in the WBS. As a general rule, whenever you have the WBS involved, the WBS dictionary tags along.

Project management plan The project management plan defines how the project will be executed and simultaneously monitored and controlled. Recall that the project management plan includes all of the subsidiary plans for the project—that's at least one for each project management knowledge area and quality process improvement plan. Because project management is integrative in nature, expenses from each knowledge area are considered inputs to the cost estimate. Specific contents of the project management plan to consider for the PMI examination include the following:

• Schedule management plan The availability of resources, when the resources are to do the work, when capital expenses are to happen, and so on. The schedule management plan can also consider contracts with collective bargaining agreements (unions) and their timelines, seasonal cost of labor and materials, and any other timings that may affect the overall cost estimate.

• Staffing management plan We've already determined that time is money, because the project pays for the labor to create the items promised in the project scope statement. The staffing management plan determines when project resources, specifically the people, are needed on the project team and the expenses to have those folks involved. Chapter 9 discusses the staffing management plan in more detail.

• Risk register A risk is an uncertain event that may cost the project time, money, or both. The risk register is a central repository of the project's risks and the associated status of each risk event. Some risks the project team can buy their way out of, while other risks will cost the project if they come true. We'll discuss risks in detail in Chapter 11, but for now, know that the risk register is needed because the cost of the risk exposure helps the project management team create an accurate cost estimate.

EXAM TIP Risks may not always cost monies directly, but could affect the project schedule. Keep in mind, however, that this could, in turn, cause a rise in project costs because of vendor commitment, penalties for lateness, and added expenses with additional labor.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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