Budget Analysis And Cost Estimating

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This portfolio work project, a budget analysis and cost estimating artifact, is based on your selected business or IT project. You may choose to base your assessment on the “Revive LLC” case study for the development of a new online employee orientation module, or you may select a company/scenario of your own choosing. Both human resources (HR) and information technology (IT) employees, as well as contractors, will be used in this project.

PMI has provided a definition of the Cost management plan in the 7th edition of the PMBOK® Guide and is defined as “this plan is a component of a project or program management plan that describes how costs will be planned, structured, and controlled” (Project Management Institute, 2021, p. 218). Also, consideration needs to be taken with respect to project costs and stakeholder differences. Financial performance techniques provide both internal and external measurement capabilities that allow for decision-making, financial analysis, and mitigation strategies.

Effective cost management involves establishing a cost baseline for measuring project performance. Establishing the project baseline is like establishing a point of reference. Whatever that point of reference, it will become the baseline against which project performance will be measured. This cost baseline becomes the basis for more advanced techniques, such as earned value management (EVM).

Project cost management includes planning for the resources needed: the people, equipment, and materials. With the use of proven estimating techniques, an estimate is presented to the project sponsor and management for approval. Upon approval, the cost estimate becomes the official budget for the project. As the project goes through the normal project life cycle, cost control techniques track and monitor the budget, which allows you to make sure you will not incur a budget overrun.

Assess the failed project by examining the cost estimation process.
Analyze the existing project work-breakdown structure (WBS).
Create a new WBS.
Using the original WBS:

Scenario

choose either Option A or Option B. You do not need to do both. Both options will be graded using the same rubric.

Option A: Project Revive LLC is a consulting firm of highly charged and accomplished project managers whose main stream of revenue comes from managing the turnaround of failing projects. As a consultant with Project Revive LLC, you will study, analyze, and manage a failed project from NearlyFree.com. NearlyFree.com is a fictitious company and the project documents for NearlyFree.com project scenario are located in Resources area for this assignment. The NearlyFree.com project was originally scoped to develop and deploy an automated web-based training system for new employees to reduce the workload and cut down personnel resources required to complete the new employee orientation (NEO) training.

Microsoft Project is the required software tool for this course due to its wide industry acceptance and its use in many project management professional roles. To make this easier, you have the ability to download and install your own version of MS Project from the Capella Microsoft Imagine WebStore using the instructions provided in the MS Imagine section of the course overview. See the Software Preparation and Technology Access activity for more information.

Practice using MS Project in this course helps prepare you for future professional PM roles and responsibilities; please use MS Project for those tasks supported by MS Project. If you have access to other tools such as MS Visio, MS PowerPoint, and MS Word that you believe may still meet the requirements of this course, please discuss your selected alternative with your instructor.

Use the PMBOK® Guide as the model for developing the deliverables.

Part 1: Budget Analysis Report
Deliverable: Create a budget analysis report of the current failed project.

Using the MS Project functionality to:

Display project summary information and report.
Create Project reports.
Export project plan cost data into Excel.
Develop an analysis report including the following:
Analyze current financial state using cost estimating techniques.
Estimate costs of individual schedule activities or work packages by reviewing WBS and associated project costs.
Identify failure points that occurred throughout the project

 

Sample Solution

Your portfolio project focuses on analyzing the cost management aspects of a failed project and creating a revised plan for improvement. Let’s break down the key elements and how I can assist you:

Project Scenario:

You have two options:

  • Option A: Analyze the NearlyFree.com project, a failed attempt to develop an automated employee orientation system.
  • Option B: Choose a company/scenario of your own choosing.

Deliverables:

  • Part 1: Budget Analysis Report: This report analyzes the failed project’s cost estimation process, work breakdown structure (WBS), and identifies failure points.

My Role:

While I cannot directly access and manipulate project management software like MS Project, I can guide you through the process and provide valuable insights:

  • Understanding Cost Management: I can explain key concepts like cost baseline, earned value management (EVM), and cost control techniques.
  • Analysing the Failed Project: I can help you understand the cost estimation techniques used, analyze the existing WBS, and identify potential shortcomings.
  • Creating a New WBS: I can suggest improvements to the WBS structure based on best practices and project management principles.
  • Identifying Failure Points: I can assist you in analyzing project data and reports to pinpoint areas where cost overruns or inefficiencies occurred.
  • Financial Performance Techniques: I can explain financial performance techniques like budgeting, forecasting, and variance analysis to help you build a robust cost management plan.

Additional Resources:

  • PMBOK® Guide: Refer to the 7th edition of this guide for project management best practices and cost management principles.
  • NearlyFree.com Project Scenario (Option A): If you choose this option, access the project documents provided in your course resources.

Remember, the key to this project is to critically analyze the failed project, identify areas for improvement, and propose a revised plan for cost management based on best practices. I can be a valuable resource in providing information, suggesting strategies, and guiding your analysis.

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