Chapter 5: CostPlanning

THE COMPTIA IT PROJECT+ EXAM TOPICS COVERED IN THIS CHAPTER INCLUDE:

• 1.6 Given a project initiation document (a project charter or contract), including a confirmed high-level scope definition and project justification, demonstrate the ability to identify and define key elements.

• 2.3 Demonstrate understanding of estimating concepts, techniques, and issues.

• 2.14 Demonstrate the ability to create an activity cost estimate.

• 2.15 Demonstrate the ability to create an activity time estimate (in units of time).

• 2.16 Recognize and explain the difference between a project cost estimate, effort estimate, and time estimate.

• 2.20 Demonstrate the ability to assign resources to the schedule.

• 2.21 Given a project scope, timeline, cost, project team, and dependencies, demonstrate the ability to manage key elements of the project budget.

By this time, you may be wondering why you have to have a plan for everything. If you know the scope of your project and you’ve identified the tasks to complete the project, why can’t you just get started? As the project manager, you aren’t going to be managing just the scope and the duration of the project; you are also managing the costs. To understand what your project will cost and to create and manage your budget, you need to identify all of the expenses associated with your project. Developing a plan to identify and manage your costs will help you complete your project within the approved budget.

In a fantasy world, corporate funds would be unlimited and projects would be approved based on the result they produce and provided with the funding required to do what it takes to complete the project. In the real world, projects have budgets, and cost overruns are not a good thing. Money is always a hot topic. There is never enough to go around, and you are always asked to do more with less. Going back and asking for more money after the project is underway is not a pleasant undertaking, so you want to do the best job possible of planning for the funds you will need. Estimating project costs can be a tricky undertaking, but luckily project management provides some useful tools and techniques to help you through this effort.

Resource planning looks at identifying the types of resources you need to complete your project and assigning resources by job description or job title to each project task. Cost estimating is the process of determining what you will spend for the resources you need to complete the work on your project. There are three types of cost estimating: analogous estimates, parametric modeling, and definitive estimates. Cost budgeting allocates the approved costs of all the project resources over your project timeline to create a project budget. A copy of the project budget before any work has started is the cost baseline. We’ll discuss these topics and more in this chapter. Let’s get started.