CVE30004 Cost Engineering Portfolio 5

Project Planning and Processes, and Project Resources

Question 1
Project cost management mainly focusses on the cost of resources that need the project activities
to be completed. There are four main processes in project cost management which are;

1. Resource Planning

Purpose – To identify the resources required for the project.

Since identifying every resource required for the project is a complex process, a Work
Breakdown Structure can be used to help simplify the process where it shows the detailed
components along with the no. of labours, materials, and equipment. We also need to
determine the constraints of the time and money of the project.

Key Benefit -This process provides the guidance and direction for the project.

2. Cost Estimate

Purpose – To predict or estimate the appropriate cost of the resources.

When estimating the cost of resources for the project, three types of techniques can be used;

• Estimating the costs with the experience of past projects. The past projects should be
a similar project. The actual cost from the past similar project can be used to estimate
the cost of the project where the accuracy of the estimate depends how similar the
past project is to the current project. This is also known as analogous estimating.

• Enquiring from the suppliers or contractors.

• Enquiring from the government agency. For e.g.-: JKR Schedule of Rates can be used
for projects located in Kuching Malaysia. This provides the rate for each work done
on the project where we can multiply the given rate by that quantity to find the total
cost spent on the specific work for e.g.-: excavation.

Key Benefit -This process determines the cost of the resources.

3. Cost Budgeting

Purpose – Determining the cost baseline and funding requirements for the project after
allocating the budgets for the entire project.
An s-curve is plotted with cost against time according to the Gantt chart where we can
determine hoe much cost is needed for each specific time or duration. From the graph the
cost baseline can be determined.

Key Benefit -This process can control and monitor the performance of the project.

4. Cost Control

Purpose – To analyze the difference in between the actual and estimated costs to
continue further actions of the project since this process occurs in the project execution
part.
In a project, the cash flow of the project should be considered, therefore, for a certain
duration, if the amount of cashflow is low or not enough, the scope of work of the project
should be decreased. But if the project has enough fundings and is approved by the
clients and contractors, the budget allocated for the project can be increased instead.

Key Benefit- The cost baseline is maintained throughout the project where it can be
altered according to the adjustments done on the scope of work etc.
Question 2
References
Adobe Experience Cloud, “Project Cost Management”, Adobe Experience Cloud, viewed 22nd
November 2021,<https://www.workfront.com/project-management/knowledge-areas/cost-
management>