This chapter initiated the subject of project implementation by focusing on the project budget, which authors the project manager to obtain the resources needed to begin work. Different methods of budgeting "ere described along with their impacts on project Management. Then, a number of issues concerning c°st estimation were discussed, particularly the effect 'earning on the cost of repetitive tasks and how to "se the concept of the learning curve. Finally, methods ,or improving cost estimation skills were described.
Specific points made in the chapter were these:
• The intent of a budget is to communicate organizational policy concerning the organization's goals and priorities.
• There are a number of common budgeting methods: top-down, bottom-up, the budget request, PPBS, ZBB.
• The intent of PPBS is to focus on cost-benefit relative to the organization's goals for selecting projects to fund.
The intent of ZBB is to avoid automatic percentage budgeting in each budget period by focusing on the total value of each project to the organization's goals. A form identifying the level of resource need, when it will be needed, who the contact is, and its availability is especially helpful in estimating costs.
it is common for organizations to fund projects whose returns cover direct but not full-costs in order to achieve long-run strategic goals of the organization. If projects include repetitive tasks with significant human input, the learning phenomenon should be taken into consideration when preparing cost estimates. The learning curve is based on the observation that the amount of time required to pro duce one unit decreases a constant percent- >
age every time the cumulative output dou- ~ bles.
A method for determining whether or not cost *> estimations are biased is described. The method can be used to improve any estima- ;
tion/forecasting process. .v Other major factors, in addition to learning, that should be considered when making -
project cost estimates are inflation, differen- '»
tial changes in the cost factors, waste and i spoilage, personnel replacement costs, and 3
contingencies for unexpected difficulties. t?
In the next chapter we address the subject of W task scheduling, a topic of major importance in f project management. More research and investiga- è tion has probably been conducted on the subject M¡_ of scheduling than any other element of project man- ; agement.
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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.