Professional Documents
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CH 08
CH 08
CH 08
Chapter 8
Cost and benefit planning
• Introduction
• Basics of a cost planning process
• Business case development
• Challenges for the perceived wisdom
• Summary
Introduction
‘The method I use to estimate costs is think of a number and
double it.’ [Project Planner]
‘The only people who give reliable estimates are depressed or
worse.’ [Professor of Accounting]
Costing processes are rarely objective
• Stakeholders determine what is politically acceptable
Is there a perfect estimate?
• The estimate is an attempt to predict the state of spend at some
point in the future and is subject to uncertainty
Organisations need to decide which projects to pursue
• Portfolio management (Chapter 3), filtering (Chapter 5)
• The business case states predicted costs, benefits (not always
financial), risks
• Provides an input to selection and base line
Maylor, Project Management, 4th Edition, © Pearson Education Limited 2011
Slide 8.3
Example 1
Example 2
Example 3
Summary
Summary (Continued)