13. Effort, resources, cost

Question 1

What is effort?

Answer 1

Effort means resource consumption

• any type of resource (human, material, money)
• specified in required quantities (1st step) or related costs (2nd step)

Question 2

How can effort be estimated? Name 3 methods.

Answer 2

Basis of Project estimation is always a WBS.
Methods:
- expert estimate (single or group, depending on level of innovation)
- cost database and cost ratios (experience from simulier projects)
- percentage method (percentage of total effort spent in each individual phase is known from previous projects. Estimates of one phase exists -> derive Rest
- range estimates (three-point estimates)
Pessimistic, optimistic, realistic value

Question 3

What are resources?

Answer 3

Human Resources
Materials (raw materials, machines,..)
Money

Question 4

What are the prerequisites of cost planning?

Answer 4

WBS and resource planning

Question 5

Explain the difference between direct cost and indirect cost.

Answer 5

Direct cost

• > working hours of project members
• > used materials

Indirect ~ overhead cost

• > management
• > HR, accounting, procurement,..

Question 6

Explain the difference between variable cost and fixed cost.

Answer 6

Variable cost
-> depends on capacity utilization or production volume

Fixed cost
-> do not depend on..

Question 7

Explain cost-center accounting, cost-unit accounting, and cost-type accounting.

Answer 7

Cost-center accounting

• used by company accounting
• calculates hourly rates for dep. incl. direct/indirect costs
• overhead is distributed across all dep.
• full cost rates per hour are charged to projects

Cost-unit accounting

• most important in projects
• projects, sub-projects and work packages are cost units

Cost-type accounting

• used in projects
• example: interval costs, external costs