Budget and Cost Management

(PMBOK – 6th Edition)

By Sunesh Hettiarachchi
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Develop project budget

• What needs to be done? (easy to know with a good work
breakdown structure)

• Who should do it? (project team member, outside contractor,

other?)

• What physical resources do they need to do it?

• How much will it cost?

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Decide on how much, how many, & why?

• Personnel: professional, administrative, support staff

• Facilities: office space, special requirements

• Equipment: computers, copiers, fax machines, vehicles

• Supplies: raw material, medical supplies, office supplies,

petrol
• Contracts: special services, maintenance, other

• Travel: who, where, how, length of stay, how many times

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Calculate the financial resources needed

• Physical Resources Financial Resources

• Personnel >>>> Salaries, fringe
benefits, etc.
• Facilities >>>> Rent, mortgage,
utilities, etc.
• Equipment >>>> Rental, purchase,
maintenance
• Supplies >>>> Estimate unit cost
• Contracts >>>> Estimate annual
cost
• Travel >>>> Transportation,
lodging, meals, per-
diem, etc.
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Estimating project cost - template

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Let’s practice

• Example of WBS
• Activity 1
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Scheduling Project Costs

Making a cost plan

1. Estimate total cost for each activity

2. Identify when cost will actually be spent

3. Use EST and LST for each activity to determine how costs are
spread over project
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Sample template of a Cost Plan

Activity Week 1 Week 2 Week 3 Week 4 Cost

Activity 1
Activity 2
Activity 3
Cost per week
Cost to date
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• Example project for preparing a cost plan

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Critical Path and Slack Times

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Let’s practice

• Activity 2