PROJECT COST ESTIMATION

“DEMYSTIFYING COST
ESTIMATING”
April 19, 2013

PRESENTERS:
Mark A. Umrah,
Program Management Office (PMO) & Special Projects Eng.
Brian M. Case, P.E PMP AVS
Senior Supervisor – Reliability Engineering

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 GROUND RULES

• Stay engaged
• There are no dumb questions
• Assume nothing

Housekeeping
• Put phones on vibrate or silent
• Take phone calls outside during the
presentation
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PRESENTATION OUTLINE

• DEFINING PROJECT COST ESTIMATES

– What is a Project Cost Estimate
– Class of Estimate, their characteristics and usage?
– Level of Preparation and Effort required
– Direct Costs and Indirect Costs , Contingency and
Management Reserves..

• TOOLS AND TECHNIQUES

– ANALOGOUS, PARAMETRIC, VENDOR BIDS,
BOTTOM-UP
– Making Your Project Plan Work for You

• KEYS TO SUCCESFUL ESTIMATING

– List of Project Planning Templates 3
WHY PLAN?

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 PURPOSES OF PLANNING
• Manage expectations
– Problem being addressed
– Work that will be performed
– Deliverables
– Who will be involved & their responsibilities
– Costs
– Timelines
• Establish project direction
• Provide Baselines for Measuring Project
Performance
• Scope, Schedule, Cost, etc.
• Improve Control
• Continuity
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Recipe for Success
WHAT IS PROJECT PLANNING?

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THE PROJECT LIFE-CYCLE

Execution

Initiation PLANNING Closing

Monitoring
& Control

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 THE PLANNING PROCESS

• Comprises Sub-Processes

• Sub-Process Outputs
1. Scope Management 6. Communication
2. Time Management Management
3. Cost Management 7. Risk Management
4. Quality Management 8. Procurement
5. HR Management Management

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 THE PROJECT PLAN
• Project Charter
• Outputs of Planning Sub-Processes – Subsidiary Plans
Inputs
• Guidelines, Templates, Lessons Learned, etc.
• Organizational Culture

er t
Exp em
Tools & Jud
g
ent
Techniques Me
e ti ng

Output
Project
Plan 9
HOW TO PLAN YOUR PROJECT?

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12 KEY STEPS TO PLANNING YOUR PROJECT

1. Collect Requirements
2. Define Scope & Obtain Approval
3. Agree Approach & List the Big Steps
4. Breakdown the Big Steps Progressive Elaboration

5. Determine Resource Requirements & Availability

6. Sequence Activities & Develop Schedule

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12 KEY STEPS TO PLANNING YOUR PROJECT

7. Identify Risks & Plan Responses

8. Estimate Costs Progressive Elaboration

9. Determine Budget
10. Develop other Subsidiary Plans
• Communications, Quality, Human Resource, Procurement

11. Develop a Draft Project Plan & Review with

Stakeholders
12. Baseline Your Project Plan

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 WHAT NOT TO DO!

• Start the Project without a Plan/Approved Plan

• Create the Plan just because……….
• Create “Nice to Hear” Plans
• Create the Plan without a Defined Scope
• Commit to a Date without a Detailed Schedule
• Exclude Risk Assessment
• Assume this is the only project for you & your team
members
• Think you can do it all by yourself
• Forget to keep stakeholders in the loop
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 WHAT NOW?

Execution

Initiation PLANNING Closing

Monitoring
& Control

• A living document
• Updated throughout the project lifecycle
• Changes must be approved by the Project
Sponsor 14
PROJECT PLANNING & THE GATE SYSTEM

GATE 2 PLAN PROJECT GATE 3

 Project Scope Statement

 Project Plan

Refer to the PMO Intranet Page

Contact the PMO for Assistance

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QUESTION & ANSWER SESSION

USEFUL PROJECT MANAGEMENT REFERENCES

• Project Management Body of Knowledge (PMBOK®

Guide)

• Project Management Institute (PMI): www.pmi.org

• Internet: www.projectmanager.com
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 eal!
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You
j oy en ho!
En LUNCH TIME u
B vec
Pro

as
ki m
Bon tit! Itada
e
Ap u!

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