The project scope statement is also an input to the cost estimating process. What a surprise! The project scope statement is needed because it defines the business case for the project, the project justifications, and the project requirements—all things that'll cost cash in order to achieve. The project scope statement can help the project manager and the stakeholders negotiate the funding for the project based on what's already been agreed upon. In other words, the size of the budget has to be in proportion to the demands of the project scope statement.
While the project scope statement defines constraints, it also defines assumptions. In Chapter 11, which discusses risk management, we'll discuss how assumptions can become risks. Basically, if the assumptions in the project scope statement prove false, the project manager needs to assess what the financial impact may be.
Consider all of the elements in the project scope statement that can contribute to the project cost estimate:
• Contractual agreements
• Safety and health issues
• Environment expenses
• Security concerns
• Cost of intellectual rights
• Licenses and permits
Lastly, and this is perhaps one of the more important elements in the project scope statement, is the requirement for acceptance. The cost estimate must reflect the monies needed to ascertain the project customer's expectations. If the monies are not available to create all of the elements within the project scope, then the project scope must be trimmed to match the monies that are available or more cash needs to be dumped into the project.
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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.