ASSESSMENT TASK 2

Draft Project Cost Management Plan

Manager Networks
Project Cost Management Plan

Introduction
Manager Networks is an organisation that provides networking events for business people across Australia. The
project is to organise a formal conference on cutting edge leader topics which focus on leadership skills,
knowledge and trends. The outcome of the project is to promote Management Networks and provide
professional development for members. The purpose of this document is to determine the resource requirements
used to develop a preliminary cost estimate. Furthermore, based on the estimated cost, the project budget and
registration fees will be proposed to cover the costs of the project and bring a 50% profit to the organisation.

Resource requirements
To successfully estimate the project costs, the major resources requirements need to be identified. Firstly, the
selection criteria for the venue are required. The venue needs to be located in the centre of Brisbane, which has a
conference room that can accommodate up to 150 people. Furthermore, the venue must be able to provide
required conference equipment, including audio-visual equipment, lecterns and an electronic whiteboard.
Additionally, conference catering should be on-site and include a high-quality morning tea, lunch and afternoon
tea. Finally, accommodation needs to be booked for speakers who do not locate at Brisbane and staff of
Manager Networks, which is approximately 20 people.

The second resource requirement is speakers. Five speakers will speak at the conference, and
they should be well-known across industries and knowledge about leadership. It is expected to have four
Australian speakers and one international speaker at the conference. $2,000 fee will be paid for each speaker,
which includes travel costs depending on their location.

The marketing costs should also be included in this document. The marketing team identified
six different marketing methods to promote this conference. The first one is digital marketing
communication using social media channels combining with search engine advertising and organisation-
sponsored websites, the cost of a digital marketing package will be listed in the
project costs. Additionally, direct marketing using several types of media will be utilised. The
marketing team has suggested collaborating with Leader Community News Magazine which is a famous
magazine in leadership in Australia to promote the conference both online and offline.

Furthermore, the organisation already has a database of potential participants who came to previous
conferences, so the team will directly email and mail them invitations of this
conference. Finally, sponsorship marketing through associating with other organisations will be used. This
marketing approach will help to reduce the costs of the project as it will bring
incomes to the project. The team is now working with potential sponsors and will provide the list as a separate
document. Finally, sales promotion will be applied to participants who register early.

Finally, the costs for event staff and other facilities will be covered. For example, the conference may require a
photographer to take photos and film the conference for future promotions.

Major project costs

Projected costs
Venue for the conference $10,030
Catering for the conference (including morning tea, tea break, lunch Included in the Venue fee as a
and dinner) package
Speaker fees (including travel fee) $10,000
Airfare for speakers who do not locate in $2,774
Brisbane / Australia
Airfare for staff ($250 x 20) $5,000

1
 Accommodation for 20 staff and 5 speakers. $2,604
Publicity $15,000
Courier for mailing invitations $1,595
Printing 500 invitations (including delivery fees) $292.04
Facility (including visual and audio equipment) Included in the Venue fee as a
package
Digital campaign package (including social media advertising and $6,000
Google Ads)
Total $53,295.04

Potential causes of increases in costs

 Late speakers and venue details
For the marketing campaign to be launched early and successfully, the information of speakers and
venue should be finalised early and sent to the marketing team. However, if the details of speakers and
venue are not confirmed early, more money will need to be invested in the marketing campaign to
ensure the efficiency of the marketing campaign.
 Changes in speakers or venue
Another cause of cost increase is the changes in speakers or venue, which requires the organisation to
inform participants and correct details on marketing materials. Again, this will delay the marketing
campaign and require more efforts and costs.
 Inadequate number of participants
Many factors can cause an inadequate number of participants. Firstly, topics may not be interested and
attractive to business leaders to attend the conference, so the number of participants will be under the
expected number. Another reason is the high registration fees. Since it is expected to make 50% of
profits after the cost, this may be consequent in high registration fees to successfully meet the expected
profit. Under the Covid-19 situation, high registration fees can be a huge risk to the conference.
 No sponsorship
The last cause of cost increase is no sponsorship. Since the organisation expects to attract sponsorships
from large organisations to cover the costs, no sponsorships will require the team to recalculate and
reduce the costs.

Project cost control procedures

The project costs will be monitored by Cost Variance as per the below formula.
Cost Variance (CV) = Budgeted Cost (BC) – Actual Cost (AC)

If the CV is a negative value, it means that the project is over budget. However, if the CV is a positive value,
then the project is under budget.

Budget variances of up to 5% can be accommodated but must be reported. The below table
indicates the approval hierarchy that the project manager needs to follow to obtain the
approval.

Allowable variations in costs and approval requirements.

Budget Variance Approved by
1% - 5% Approved Project Manager and Chief of Finance
5.1% - 6% Approved by Project Sponsor
6.1% - 7% Approved by Management Board
More than 7% Cancel the project

Email with Draft Project Cost Management Plan attached

To: Project Team
Subject: Project Cost Management Plan

2
Dear team,
I have made our project cost management plan for the annual conference needs. The plan required is still a draft
and I need your input of it. Please be kind to review the draft project cost management plan which is attached.
Thank you.

Best regards.

Project Cost Management Plan

Manager Networks
Project Cost Management Plan

Introduction
Manager Networks is an organisation that provides networking events for business people across Australia. The
project is to organise a formal conference on cutting edge leader topics which focus on leadership skills,
knowledge and trends. The outcome of the project is to promote Management Networks and provide
professional development for members. The purpose of this document is to determine the resource requirements
used to develop a preliminary cost estimate. Furthermore, based on the estimated cost, the project budget and
registration fees will be proposed to cover the costs of the project and bring a 50% profit to the organisation.

Resource requirements
To successfully estimate the project costs, the major resources requirements need to be identified. Firstly, the
selection criteria for the venue are required. The venue needs to be located in the centre of Brisbane, which has a
conference room that can accommodate up to 150 people. Furthermore, the venue must be able to provide
required conference equipment, including audio-visual equipment, lecterns and an electronic whiteboard.
Additionally, conference catering should be on-site and include a high-quality morning tea, lunch and afternoon
tea. Finally, accommodation needs to be booked for speakers who do not locate at Brisbane and staff of
Manager Networks, which is approximately 20 people.

The second resource requirement is speakers. Five speakers will speak at the conference, and
they should be well-known across industries and knowledge about leadership. It is expected to have four
Australian speakers and one international speaker at the conference. $2,000 fee will be paid for each speaker,
which includes travel costs depending on their location.

The marketing costs should also be included in this document. The marketing team identified
six different marketing methods to promote this conference. The first one is digital marketing
communication using social media channels combining with search engine advertising and organisation-
sponsored websites, the cost of a digital marketing package will be listed in the
project costs. Additionally, direct marketing using several types of media will be utilised. The
marketing team has suggested collaborating with Leader Community News Magazine which is a famous
magazine in leadership in Australia to promote the conference both online and offline.

Furthermore, the organisation already has a database of potential participants who came to previous
conferences, so the team will directly email and mail them invitations of this
conference. Finally, sponsorship marketing through associating with other organisations will be used. This
marketing approach will help to reduce the costs of the project as it will bring
incomes to the project. The team is now working with potential sponsors and will provide the list as a separate
document. Finally, sales promotion will be applied to participants who register early.

Finally, the costs for event staff and other facilities will be covered. For example, the conference may require a
photographer to take photos and film the conference for future promotions.

Major project costs

3
 Projected costs
Venue for the conference $10,030
Catering for the conference (including morning tea, tea break, lunch Included in the Venue fee as a
and dinner) package
Speaker fees (including travel fee) $10,000
Airfare for speakers who do not locate in $2,774
Brisbane / Australia
Airfare for staff ($250 x 20) $5,000
Accommodation for 20 staff and 5 speakers. $2,604
Publicity $15,000
Courier for mailing invitations $1,595
Printing 500 invitations (including delivery fees) $292.04
Facility (including visual and audio equipment) Included in the Venue fee as a
package
Digital campaign package (including social media advertising and $6,000
Google Ads)
Total $53,295.04

Potential causes of increases in costs

 Late speakers and venue details
For the marketing campaign to be launched early and successfully, the information of speakers and
venue should be finalised early and sent to the marketing team. However, if the details of speakers and
venue are not confirmed early, more money will need to be invested in the marketing campaign to
ensure the efficiency of the marketing campaign.
 Changes in speakers or venue
Another cause of cost increase is the changes in speakers or venue, which requires the organisation to
inform participants and correct details on marketing materials. Again, this will delay the marketing
campaign and require more efforts and costs.
 Inadequate number of participants
Many factors can cause an inadequate number of participants. Firstly, topics may not be interested and
attractive to business leaders to attend the conference, so the number of participants will be under the
expected number. Another reason is the high registration fees. Since it is expected to make 50% of
profits after the cost, this may be consequent in high registration fees to successfully meet the expected
profit. Under the Covid-19 situation, high registration fees can be a huge risk to the conference.
 No sponsorship
The last cause of cost increase is no sponsorship. Since the organisation expects to attract sponsorships
from large organisations to cover the costs, no sponsorships will require the team to recalculate and
reduce the costs.

Project cost control procedures

The project costs will be monitored by Cost Variance as per the below formula.
Cost Variance (CV) = Budgeted Cost (BC) – Actual Cost (AC)

If the CV is a negative value, it means that the project is over budget. However, if the CV is a positive value,
then the project is under budget.

Budget variances of up to 5% can be accommodated but must be reported. The below table
indicates the approval hierarchy that the project manager needs to follow to obtain the
approval.

Allowable variations in costs and approval requirements.

Budget Variance Approved by

4
 1% - 5% Approved Project Manager and Chief of Finance
5.1% - 6% Approved by Project Sponsor
6.1% - 7% Approved by Management Board
More than 7% Cancel the project

Any changes in cost must follow below procedure.

1. Firstly, an initiator of a change request needs to complete a Change Request Form with the full
description about the change and its impacts on the project, including budget and timeline, so that a
decision-maker can determine if the change can be done.
2. Then, the project team will investigate the impacts of the change request on the project values and
provide any missing information.
3. After that, the Operations Manager will review the Change Request Form and analyse if the change is
feasible and approve to proceed. Any missing information that can affect the decision will need to be
highlighted with the project team and asked for the update.
4. If the approval is made, the change is recorded, and the Work Breakdown Structure will be updated
accordingly with the change.
5. Moreover, if the project timeline and cost need to be appropriately adjusted, they are also be reflected
in the updated Project Scope Management and Project Management Plan documents. These documents
will be sent to the senior management for review and record.
6. However, if the change is rejected by the Operations Manager, then this should still be recorded for
future reviews.

Email with Project Cost Management Plan attached

To: Senior Management
Subject: Final Project Cost Management Plan

Dear Sir,
I have made our project cost management plan for the annual conference needs. The plan required your
evaluation to completely done. Please be kind to review the final project cost management plan which is
attached. Thank you.

Best regards.