Week 3 Hand-in Assignment - Alex

In accordance to Sanghera (2010) the basic characteristics for schedule and budget are cost and time consequently. Budget consists of costs connected to the time scale, and schedule is defined from the estimated time needed to finish up all the planned project activities. There is a triple constrain among scope, time and cost. Change in one of those three parameters will change at least one the others. It means that its vitally important to control them. Controlling the scope means controlling all the factors which can cause the scope changes to one or the other side and, in addition, managing and controlling the requests for changes and their influence on the scope if that occurres. By means of controlling a schedule we are controlling the time. When controlling a schedule it is important to monitor the progress and progress changes and their influence on project delivery time and completion date. Controlling the costs signify controlling and monitoring changes and upgrades of the relevant costs, budget as a consequence, and project cost baseline (which is the cost with the relevant project timeline). The main aspects of cost controlling are controlling and monitoring the expenditures of project funds and, as a result, the work performed and controlling the changes to the cost performance baseline when approved. As a Project manager (PM) I need to estimate all type of cost which can occur in different stages of the project through the process of the cost estimation. Risks and their impact on cost which can occur during the project life cycle could be part of the consideration (not presented in this report). The challenge and a key of this task is to make a correct schedule including work sequence and persons assigned for different tasks. Right recourse allocation is quite important as well, in order to get the correct cost results when estimating the budget. Allocation of the costs is based on the actual work time and the calendar time lines. In accordance with the planning actions and calculations performed the lead project time is 80 days and the total budgeted cost for the project is equal $ 106.986,00$. As it shown in the budget (attachment 2), the most expensive cost items are first and second Market researches. The activities lead time is also the biggest one and equals to 32 days.

Due to assumption that the all resources payments are made by a daily foundation the cash flow on the project presented below.

BAC (budget at completion) showing the project`s total value in our case it is the 106.986,00$ = app.107.000,00$. This is the calculated budget to perform the all activities in the given project, in some literature names as the planned budget (Sanghera, 2010, p.357). So the cost efficiency cost-performance index (CPI) = EV/AC where AS is the Actual Cost showing the money spent and EV earned value EV=BAC(work completed/total work required) CPI represents whether you are receiving a fair rate for your money. So in our case the planned value (PV) at the end of the 25 day is calculated: PV= BAC * (TP/TSV) = 107.000*(25/80)=33.437,5$ where,

TP: time passed TSV: total scheduled time. CPI = EV/AC = 0,55 where, AC=48.000$ due to case condition EV=107.000$*0,25=26.750$ And the a determination of the schedule efficiency is SPI= EV/PV indicates the relation between the perform work due to planned work. Where the PV is the planned value and EV is earned value, The EV showing amount of the planned work by this point in time in expressions of cost (Sanghera, 2010, p.359). Schedule performance index (SPI) is calculated to: SPI= = EV/PV = 0,8 Conclusion. CPI is equal to app. 0,6 it is under than1 and the project cost is not efficient. The theoretical or ideal CPI can be equal to 1.And as SPI app. 0,8 is under 1 the project has schedule not efficient and value is undesirable (Wysocli, 2008, p.270). ETC - Estimate to complete at budgeted rate. Money which shall be spend to project. ETC=BACEV = 107.000$ - 26.750$ =80.250$ Estimate to complete - ETC at the present CPI. ETC = (BAC-EV)/CPI = (107.000-26.750)/0,6 = 133.750$

Total completion cost will be calculated like that: EAC=AC+ETC (budgeted rate) =48.000+133.750=181.750$ where, Estimate at completion: EAC (at the budgeted rate) In accordance with the details given the total project completion cost will be equal to 181.750$. Based on the above calculations we can conclude that in order to complete the project we need 181.750$ 107.000$ = 74.750$ in addition, than it was initially estimated in the budget. So, keeping in mind the project performance so far and taking into the point all the calculations in this work we can see that in spite of the fact that the actual project progress is ahead of the planned one, the project is still going to end up with the budget overrun. The following important factors shall be monitored and reported: earned value, value and actual cost. Reporting can happen usually weekly and/or monthly (PMBOK, 2008, p.182)

As we are foreseen the overrun we can try to avoid, or, at least minimize it at this stage, so, the following actions might be taken: identification of all potential risks, try to use the recourses as efficient as possible, monitoring and controlling of the scope, time and cost as close as possible. Best regards, Alex. Reference: Sanghera, P. (2010) PMP in depth: project management professional study guide for the PMP exam. 2nd ed. Boston: Course Technology. Project Management Institute. (2008) A guide to the project management body of knowledge (PMBOK guide) . 4th ed. Newton Square Wysocki, R.K. (2009) Effective project management: traditional, agile, extreme. 5th ed. Indianapolis: Wiley Publishing.