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MS4801 Project Management

Project Budgets. Four elements in most project budgetsDirect labor costs ? wage multiplied by timeOverhead ? expenses incurred to maintain environmentFringe benefits ? directly proportional to direct labor (est: 30-40%)Auxiliary costs ? project specific costs. Management Reserve. AKA: slush fund, fudge factor, etc.Agree/DisagreeProvides flexibility?Encourages overruns?.

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MS4801 Project Management

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    1. MS4801 Project Management Budget Planning & Resource estimating WEEK 6

    2. Project Budgets Four elements in most project budgets Direct labor costs – wage multiplied by time Overhead – expenses incurred to maintain environment Fringe benefits – directly proportional to direct labor (est: 30-40%) Auxiliary costs – project specific costs

    3. Management Reserve AKA: slush fund, fudge factor, etc. Agree/Disagree Provides flexibility? Encourages overruns?

    4. Project Variance

    5. Dynamics of Accurate Estimating Unique or Unpredictable Factors Skills and knowledge of project team unknown Technology-based projects face questions of reliability Expect a certain number of changes during implementation, but there’s no way to predict how many Overestimated projects may not be pursued, while underestimated may appear “doable” Business benefits must be determined ahead of time Incorrect timing decisions will cost money Individual performance based on ability to meet estimates

    6. Classic Mistakes (1) Avoid making “ballparks” in elevators RESPOND: There are a lot of factors (list some of them) I wouldn’t want to mislead you by offering a guess on that… Offer to get a sheet of paper to write details Take your best guess and double it. Refuse (2) Confusing an estimate with a bid (3) Padding the estimate

    7. Golden Rules Have the right people make the estimates Base the estimate on experience Demonstrate how estimate is tied to product/project specifications

    8. Different Estimates for Different Decision Points Three Levels of Accuracy (accuracy takes time, costs money) Idea Evaluation – only function is to determine if further accuracy is warranted Order of Magnitude (ROM) – extrapolations from other projects Detailed Estimate – bottom-up considering all the steps in a project

    9. Scheduling Resources Discuss Power Train Case What recommendations would you make to Jones? (2) What approaches might you take maximize the scheduling software, while at the same time ensuring the “right” people are assigned to projects?

    10. MS4801 Project Management Week #6 Estimating Risk & Planning Contingencies

    11. Risk Assessment Process Step 1: Risk identification Step 2: Risk assessment Step 3: Risk response development Contingency planning Contingency funding Step 4: Risk response control Change control management

    12. Risk Assessment Form MS Office 97 to XP

    13. Risk Severity Matrix

    14. Risk Response Matrix

    15. Step 4: Risk Response Control

    16. Alaska Fly-Fishing Expedition See handout

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