Name: Banares, Emmanuel B. BSIT 4
Project Cost Management case study
1.Perform a financial analysis and calculate the year in which payback occurs, NPV and
ROI. Assume the projected costs and benefits for this project are spread over four
years as follows:
•
•
•
Estimated costs are $100,000 in Year 0 and $25,000 each year in Years 1, 2, and 3
Estimated benefits are $0 in Year 0 and $80,000 each year in Years 1, 2, and 3.
Use an 8 percent discount rate.
Do you recommend investing in this project?
2.Create a spreadsheet to calculate your projected total costs, total revenues, and total
profits for giving a seminar on cost estimating. Below are some of your assumptions:
A. You will charge $600 per person for a two-day class.
B. You estimate that 30 people will register for and attend the class, but you want
to change this input.
C.Your fixed costs include $500 total to rent a room for both days, setup fees of
$400 for registration and $300 for designing a postcard for advertising.
D.You will not include any of your labor costs for this estimate, but you estimate
that you will spend at least 150 hours developing materials, managing the
project, and giving the actual class. You would like to know what your time
is worth given different scenarios.
E.You will order 5,000 postcards, mail 4,000, and distribute the rest to friends
and colleagues.
F.Your variable costs include the following:
i.$5 per person for registration plus four percent of the class fee per
person to handle credit card processing; assume everyone pays by
credit card
ii. $.40 per postcard if you order 5,000 or more
iii.$.25 per postcard for mailing and postage
iv.$25 per person for beverages and lunch
v. $30 per person for class handouts
Be sure to have input cells for any variables that might change,
such as the cost of postage, handouts, and so on. Calculate your
profits based on the following number of people who attend:
10, 20, 30, 40, 50 and 60. In addition, calculate what your time
would be worth per hour based on the number of students.
3.Given the following information for a one-year project, answer the following
questions.
Planned Value (PV) = $23,000
Earned Value (EV) = $20,000
Actual Cost (AC) = $25,000
Budget at Completion (BAC) = $120,000
A. What is the cost variance?
B. What is the schedule variance?
C. What is the cost performance index (CPI)?
D. What is the schedule performance index (SPI)?
E. How is the project doing? Is it ahead of schedule or behind schedule? Is it
under budget or over budget?
F. Use the CPI to calculate the estimate at completion (EAC) for this project. Is
the project performing better or worse than planned?
G.Use the schedule performance index (SPI) to estimate how long it will take to
finish this project.
4. A team has been working on a Recreation and Wellness Intranet Project. The
schedule and cost goals are to complete the project in six months for under $200,000.
A. Prepare a one-page cost model for the project using the following WBS and
be sure to document assumptions you make in preparing the cost model.
Assume a labor rate of $100 per hour for the project manager and $60 per
hour for other project team members. Assume that none of the work is
outsourced, labor costs for users are not included, and there are no additional
hardware costs. The total estimate should be $200,000.
i.Project Management
ii.Requirements Definition
iii.Website Design
1.Registration for recreational programs
2.Registration for classes and programs
3.Tracking system
4.Incentive system
iv.Website Development
1.Registration for recreational programs
2.Registration for classes and programs
3.Tracking system
4.Incentive system
v.Testing
vi.Training, Roll Out and Support
B Using the cost model you created above prepare a cost baseline by allocating
the costs by WBS for each month of the project.
C. Assume you have completed three months of the project. The BAC was
$200,000 for this six-month project. Also assume the following:
PV = $120,000
EV = $100,000
AC = $90,000
i.What is the cost variance?
ii.What is the schedule variance?
iii.What is the cost performance index (CPI)?
iv.What is the schedule performance index (SPI)?
v.How is the project doing? Is it ahead of schedule or behind schedule?
Is it under budget or over budget?
vi.Use the CPI to calculate the estimate at completion (EAC) for this
project. Is the project performing better or worse than planned?
vii.Use the schedule performance index (SPI) to estimate how long it will
take to finish this project.