13.

Cost Management Plan

13.1 Project Information

Project Name: Laboratory Development Plan

Location: Mechanical Engineering Building at the University of Alberta
Project Manager: Shannon MacDonald

13.2 Cost Assumptions

Utilizing available human resources to the fullest extent is crucial to ensuring

the project is completed within schedule and budgetary requirements. Many
human resource assets have been provided through the University of Alberta at
no cost to the project owner. These specific assets will be heavily relied upon
due to their inherent financial advantages.

Assumptions made during the development of the Cost Management Plan:

I. The laboratory technicians will remain available and free of cost as was
communicated to the project team by the University of Alberta.
II. The budget approved by the project owner will remain the same throughout
the project subject to no minimization.
III. The laboratory technicians who have been contacted by the project team
will remain employees of the University of Alberta during the entire span of
the project. This ensures that no additional labour will need to be brought in
at additional cost.
IV. The researchers involved and working under Dr. Lipsett will not be
compensated for moving their own possessions to the new laboratory.
V. The researchers will not take any unplanned extended leaves of absence or
permanently relocate during the relocation phase of the project. This will
ensure no sub-contractors will be required to move their possessions.
VI. Researchers have accurately catalogued their needs, equipment, and
availability.
VII. The durations of the tasks will not exceed the estimated durations by a
factor of 30% as that is the reserve allocated to the project budget.
VIII. The reserve will be owned by Dr. Lipsett.
IX. No structural, chemical, or electrical deficiencies will arise during the lab
migration process which will need to be absorbed by the project team’s
budget.
13.3 Cost Constraints

Dr. Lipsett has set the budget at $10 000 dollars. This sum includes
contingency funds and is the absolute maximum available for this project.
These funds are to be allocated according to the project team’s discretion and
are to be utilized only when necessary and in a conservative manner.

13.4 Cost Risks

The cost risks associated with this project are minimal due to the project team
being provided with adequate funds. In addition, the majority of the work will be
conducted through utilizing the University of Alberta’s assets at no cost to the
project. These assets, such as laboratory technicians, will be heavily relied
upon and will greatly reduce the cost of this project. The budget has been
divided into two separate accounts, the primary account and the contingency
account. The primary account will amount to $7500 leaving the remaining
$2500 as a contingency which further mitigates the cost risk.

13.5 Budget Sources and Approvals / Cost Management Roles

The project has one source of funding which has been provided by the project
owner Dr. Lipsett. All changes as well as approvals are to be discussed with Dr.
Lipsett. The projects organizational constraints are minimal limited to contacting
Dr. Lipsett to release the required funds to the project team. The project
manager must approve all funding requests prior to bringing them to the
attention of Dr. Lipsett. The project team is not faced with any fiscal year
constraints and funding will be spent on an “as needed” basis.

13.6 Project Estimation Techniques

The project team will be utilizing bottom-up estimating due to the high level of
accuracy inherent to this method. Each phase of the project will be analysed at
the work package level to develop the greatest level of specified detail. This
method is ideal for this project as the complexity of the costs, expenses, and
budget in general is low.

Online catalogues have provided detailed costs for the materials which will be
acquired. These and all other costs will be review by the project manager and
then submitted for approval by Dr. Lipsett. The nature of the project and the aid
of the owner Dr. Lipsett for expert cost advice has resulted in a comprehensive
cost estimation.
13.7 Changes to the Budget

Budget reviews as well as changes are initially brought to the attention of the
project manager. Prior to addressing the project manager, documentation
outlining the need as well as associated research regarding the budgetary
change must accompany the change request. If the budgetary change is
approved by the project manager it is then through the project manager brought
to the attention of the project owner Dr. Lipsett for final approval.

Supporting material required to accompany a change request includes a formal

quotation from a supplier or written requests received for a stakeholder group.
Cost changes to approved materials, services and or products after the initial
estimation will require supporting documentation such as catalogue references
or formal quotations. The approved budget changes will be reflected in the cost
baseline immediately after final approval.

13.8 Cost Expenditure Tracking

Any work that has been completed which has an associated budgetary expense
is to be documented on an expense sheet. Expense sheets can be found in
Appendix 13.11. The expense sheet includes an area which specifies the
estimated baseline cost and an area which indicates if the work completed has
been done on, below, or above budget. These expense sheets are to be
completed by the project team member overseeing that particular area of work.

13.9 Cost Reporting

Earned value analysis, planned value analysis, as well as actual cost will be
used as tools to help identify and quantify completion of the project. The cost
reporting tools along with the layout in the form of an s-curve diagram can be
seen in Figure 13.1.

Figure 13.1: Earned Value, Planned Value and Actual Cost S-curve
 Cost variance will be analyzed as a performance measure and will determine
the cost performance of the project. The cost variance threshold will be kept in
the positive and will not fall below -10% of the baseline. This threshold will
apply to all aspects of the project. The project team member who was selected
to complete and compile the cost reports is Lukasz Glistak. The reports will be
submitted on a weekly basis to the project manager for review who will then
address and update the project owner Dr. Lipsett. The weekly reports will be
reviewed by the project manager and if necessary a budgetary change request
may be filed. The project documents will be updated and will include a new cost
baseline. This process allows the project team to closely monitor the budget
and inform and update the project owner of the projects status. The information
contained in the report will help to ensure the project is on track and proceeding
as planned while also being used as an early warning system for budgetary
problems. The reports will also provide the project manger measure against
which to judge the financial health of the project. Reserve spending will also be
conducted based on these cost reports.

13.10 Cost Closeout

The final cost summary will include a comparison of the actual cost vs. the
initial baseline cost estimated at the beginning of the project. The baseline S-
curve will be plotted with the actual cost S-curve. Graphically this will help to
illustrate areas in which the project preformed the best as well as poorest. This
comparison will provide the project team and the project manager valuable
information as to which areas of future projects will require greater attention to
detail or a more substantial allocation of the project reserve. The resulting data
will be archived as a collection of images in succession illustrating the
development of the project form a cost perspective. Below each image will be a
table which will display the Earned value analysis, planned value analysis,
actual cost, and Cost variance.
Appendix 13.11: Expense Sheet

Name: WBS I.D: Project: Date:

WBS Level: Laboratory
Development
Project
Labor Expenses Description: Budgeted Cost: Cost Incurred: Signature:

Hours Worked:
Hourly Rate:

Material Expenses Description: Budgeted Cost: Cost Incurred: Signature:

Equipment Expenses Description: Budgeted Cost: Cost Incurred: Signature:

Other Expenses Description: Budgeted Cost: Cost Incurred: Signature:

Note: Staple all receipts to the back of the expense sheet.