Defining Project, Estimation, and Cost

Question 1

How do you develop the project concept?

Answer 1

A strategic process:
- Identify a ‘business’ need
- Establish the need for a program/ project
- Assess feasibility
- Establish project scope
- Develop the project proposal and brief
- Put in place procurement procedures

Question 2

What is the project scope?

Answer 2

The scope statement enables establishment of responsibilities, and the basis for resource decisions and planning proccesses

Question 3

What may the project scope include?

Answer 3

• User acceptance requirements
• Project objectives
• High level specifications
• Ancillary items
• Main areas of work
• Key deliverables
• EXCLUSIONS

Question 4

What is the purpose of project planning?

Answer 4

To optimise the project system and avoid problems, this includes:
- Time and resource planning
- Cost planning
- Quality planning
- Risk analysis

The project can be monitored against this plan

Question 5

What are some planning (and control) tools?

Answer 5

• Work Break-down Structure (WBS)
• Gantt Charts (Bar Charts)
• Milestone charts
• Network Analysis Methods (critical path methods [cpm] and project evaluation and review technique [pert])

Question 6

What is Work Breakdown Structure?

Answer 6

The first stage in the deconstruction of large projects into manageable tasks
- Defining the major areas or functions within the project at the highest level
- Defining all the project activities to be undertaken down to the lowest level

Can be a function or physical breakdown

Helps with accountability
- Facilitates the setting (and later evaluation) of cost, time of quality performance targets at all levels in the organisation

Forms the basis of coding of project elements and work packages

Question 7

What is the Process Breakdown Structure (PBS)?

Answer 7

For process-oriented projects
- Outcome is a series of steps or phases, rather an identifiably tangible item
- Not suited to WBS definition

Question 8

How much detail is necessary in planning and control tools?

Answer 8

Excessive and insufficient detail are both costly
- Excessive = fosters a focus on departmental outcomes, creates unproductive paperwork
- Insufficient = lack of focus on goals, wasted effort on nonessential activities

Question 9

How should you estimate times and costs of a project?

Answer 9

Aim to predict the most likely cost & duration

Estimates improve with more information
- scope, organisation, time and cost data and risk identification and management

Requirements:
- predict most probable cost and timescale
- establish forecast of capital expenditure (the ‘S’ curve)
- state all assumptions and exclusions
- communicate estimate

Question 10

What are the factors influencing estimation?

Answer 10

• The planning horizon
• Project deadline
• Skills and competencies of people in the organisation
• The way the project is structured and designed
• The amount of slack or contingency requested/ given
• Organisation culture
• Other factors such as downtime, availability of resources, holidays, legal aspects etc.

Question 11

What are the different types of costs?

Answer 11

Direct costs: clearly chargeable to a work package
- labour
- materials
- equipment

Direct project overhead costs
- those overheads that can be tied to a work package or project deliverable

General and administrative overhead costs
- can apportion or allocate to work packages pro-rata, and also percentage may be added if you are a contractor

Question 12

What are the processes in estimating?

Answer 12

• Determine responsibilities
• Use several people to estimate
• Base estimates on NORMAL conditions
• Select time units, and be consistent in use
• Independence of estimation from other tasks, ensure objectivity
• Build in contingencies
• Add in risk assessment to assist stakeholders and refine expectations