MGT 30725 PROJECT
MANAGEMENT
LESSON 5 AND 6:
PROJECT PLANNING – TIME
AND COST PLANNING AND
MANAGEMENT
Conducted By:
Dr. Madhu Fernando,
PMP, DBA, MEng.
1
PROJECT TIME MANAGEMENT
Project Time Management Process
Plan Schedule Management
Define Activities
Sequence Activities
Estimate Activity Resources
Estimate Activity Duration
Develop Schedule
Control Schedule
2
PLAN SCHEDULE MANAGEMENT
Process of establishing the policies, procedures, and documentation
for planning, developing, executing, managing, and controlling the
project schedule.
3
DEFINE ACTIVITIES
The Process of identifying and documenting the specific actions to be
performed to produce the project deliverables.
4
SEQUENCE ACTIVITIES
The Process of identifying and documenting the relationships among
the project activities.
5
ESTIMATE ACTIVITY RESOURCES
The Process of estimating the type and quantities of the material,
human resources, or equipment, or supplies required to perform each
activity.
6
ESTIMATE ACTIVITY DURATION
The Process of estimating number of work periods required to
complete individual activities with estimated resources.
7
PROJECT ESTIMATING TECHNIQUES
Estimating method
Analogous estimating
Parametric estimating
Three-point estimating
Bottom-up estimating
Description
Generally used at the start of the project when not much is
known. Compares the current project with past similar projects.
A quick and relatively easy method of estimating, although not
terribly accurate.
Used for estimates that are quantitatively based, such as dollars
per square foot or number of installations per day. A relatively
simple method, but not every activity or cost can be estimated
quantitatively.
Accounts for uncertainty associated with estimating by
determining an optimistic (best case, represented by O), most
likely (represented by M), and pessimistic (worst case,
represented by P) scenario. The most likely estimate is weighted
most heavily.
The equation is
(O + 4M + P) / 6
Used when there is significant detail about the activity. A
detailed assessment of the resources, capabilities, and amounts
are used to determine an accurate duration or cost estimate.
This is the most accurate method but also the most timeconsuming and expensive form of estimating.
DEVELOP SCHEDULE
The Process of analyzing activity sequences, durations, resource
requirements and schedule constraints to create a project schedule.
9
CRITICAL PATH METHOD AND PERT
TECHNIQUES
Practice :
CPM Calculation
PERT Calculation
Individual Exercises
CONTROL SCHEDULE
The Process of monitoring the status of project activities to update
project progress and manage changes to the schedule baseline to
achieve the plan.
11
PROJECT COST MANAGEMENT
Project Cost Management involves developing the cost baseline, project
budget and control changes.
1.
Estimate Cost
2.
Determine Budget
3.
Control cost
ESTIMATE COST –
TOOLS AND TECHNIQUES
Expert judgment
Analogous estimating
Parametric estimating
Bottom-up estimating
Three point estimating
COST PLANNING –
DETERMINE BUDGET
Cost budgeting also uses similar tools and establish the project budget by
aggregating cost of the activities to a total budget.
The approved budget will provide the cost baseline for the project.
CONTROL COST
 Approved project budget provides the baseline for the project cost.
 Any changes to the cost baseline must be monitored and approved only with an
approved change request
Tools and Techniques:
Earned value management
Forecasting
To-complete Performance index (TCPI)
Performance reviews
Variance analysis
Project management software
CONTROL COST WITH EARNED VALUE
TECHNIQUE
Earned Value Management Formulas for
performance measurement
BAC = Budget at Completion
PV = Planned Value
AC = Actual Cost
EV = Earned Value
CV = Cost Variance
CV = EV- AC
SV = Schedule Variance
SV = EV – PV
CPI = EV/AC
SPI = EV/ PV