Reference no: EM132932499

BSBPMG533: Manage Project Cost

ASSESSMENT TASK 1: KNOWLEDGE QUESTIONS

Questions
Provide answers to all of the questions below:
1. Outline the main steps in the budgeting process for a project.
Provide your answers here

2. Discuss why key performance indicators are used in budgeting and provide three examples of financial key performance indicators that can be used to determine the effectiveness of a budget.
Provide your answers here
3. Explain the use of milestones in budgeting.
Provide your answers here

4. Explain the importance of budgetary control.
Provide your answers here
5. Explain the purpose of using spreadsheets for developing budgets and two key features of using spreadsheets.
Provide your answers here
6. Explain two methods for conducting project cost estimating and at least one advantage and disadvantage of each.
Provide your answers here

7. Explain earned value management and its application in evaluating costs.
Provide your answers here
8. Explain project cost management and its application in evaluating costs.
Provide your answers here
9. Explain how a cost plan can assist in managing costs and its use over the project life cycle.
Provide your answers here

10. Various methods are available for monitoring and analysing project costs. These methods are essential to the Project Manager as they provide insights into exactly where the project is, and compare to where it should be. The Project Manager must always select cost analysis tools that are relevant to the size and complexity of the project. Identify two (2) cost analysis methods and tools for identifying and evaluating cost variations, and briefly define each.
Provide your answers here

11. Explain two processes that can be used to measure costs against project outcomes.
Provide your answers here
12. Outline the key role and at least four responsibilities of a project manager in relation to cost management.
Provide your answers here

13. List three organisational policies and procedures that may apply to cost management in a project environment.
Provide your answers here

14. Complete the table by briefly explaining how each budgeting technique works.
Budgeting Techniques
Traditional Budgeting
Zero Based Budgeting
Incremental Budgeting
Activity Based Budgeting

ASSESSMENT TASK 2: PROJECT PORTFOLIO

Activities
Complete the following activities:
1. Carefully read the following:
This project requires you to develop and manage a project's costs. You must manage the costs on two separate occasions across a project's lifecycle, including responding to variations, recording expenditure and creating financial reports.
You can do this for a real project at your workplace, for a project associated with a start-up business you are working on yourself or you can use the Simulation Pack provided.
Vocational education and training is all about gaining and developing practical skills that are industry relevant and that can help you to succeed in your chosen career. For this reason, basing your project on real relationships with classmates or work colleagues will mean that you are applying your knowledge and skills in a relevant, practical and meaningful way!
If you use your own business or workplace, you should have sufficient financial information to complete the requirements of the assessment (read through the assessment to make sure you have access to the required information). Also make sure that you have access to at least one cost-management related policy and procedure, one budget and a Work Breakdown Structure (WBS) for the project. Speak to your assessor to get approval if you want to base this on your own business.
If you are basing this assessment on the case study business, read through the Simulation Pack in preparation for this assessment. All the information needed to complete this assessment is contained in the Simulation pack.
You will be collecting evidence for this unit in a Project Portfolio. The steps you need to take are outlined below. Before you begin, complete page 39 of your Project Portfolio. You must describe the organisation you are basing this assessment on and provide a short description of the project for which you'll manage the cost.

SECTION 1: DETERMINE PROJECT COSTS

1. Summarise important cost management information for the project using the table below.
Financial objectives of the project: Provide your answers here
Role and responsibilities assumed in the project: Provide your answers here
Relevant budget information: Provide your answers here
Cost management policies and procedures summary: Provide your answers here
Tasks and activities (WBS) Provide your answers here
2. Summarise the outcomes of your meeting with the team members to discuss and agree on the project cost management details, using the table below.
Note: If not already viewed in person by your assessor, attach proof of your meeting to this section of your portfolio.

Who did you meet with?
What are the agreed actions required to maintain the financial objectives?
What are the resources required for each task in the WBS, and the agreed maximum costs?
What are the agreed maximum project costs for required resources?
Describe the agreed processes and procedures for monitoring actual expenditure against the budget:
These must include the ongoing recording of income and expenses.
3. Estimate costs and develop a budget. Use the table below to plan your budget and then use a digital application to record the cost estimates and budget (you may use the Budget Template, or any other application preferred by your business).
Note: Attach your estimated costs and budget spreadsheet/workbook/document to this section of your portfolio.
Internet research on resource and activity costs.
What are the estimated costs of the required resources, based on internet research?
Include links showing your information sources. Provide your answers here
Input from an external stakeholder
Which external stakeholder have you consulted to obtain information regarding resource/activity costs?
How did you seek their guidance and input?
Attach proof of how you sought guidance e.g. request for a quote etc. Provide your answers here
Other pre-existing information:
What pre-existing information is available that may inform the project budget? Provide your answers here
Estimation calculations using an appropriate method.
Provide an example of how you used an appropriate estimation calculation technique.
If you are using the case study, the organisation's policy and procedures stipulate that cost estimates should be made using a bottom-up estimating technique. Provide your answers here

4. Use the work you've done in this assessment so far to develop a Cost Management Plan (you may use the template in the Simulation Pack, or any other template used by your business).
Note: Attach your Cost Management Plan to this section of your portfolio.

2. Summarise important cost management information
Summarise any information that relates to:
• the financial objectives of the project
• your role in the project (including the responsibilities)
• organisation's budget (or any other budget relevant to the project)
• cost management (e.g. monitoring actual expenditure against the budget, financial completion of project, estimating techniques, budget tolerances etc.)
• the project task and its activities (including the Work Breakdown structure (WBS).

3. Meet with your project team members to discuss and agree on the project cost management details
Meet with at least two project team members. At the meeting:
• discuss the financial objectives of the project and agree on actions required to maintain these objectives.
• identify the resources required for each task in the WBS.
• agree on the maximum project costs for required resources
• discuss processes and procedures for monitoring actual expenditure during the project lifecycle against the budget (these must include details about the ongoing recording of income and expenses as well as timely, accurate financial reporting).
Take notes at the meeting, as you will use the agreed outcomes of the meeting throughout your assessment.
Each meeting should take 30 minutes. This will either be attended in person by your assessor or they will attend online. If you are in the workplace, you may like to video record the session for your assessor to watch later (attach proof to Section 1 of your portfolio). Your assessor can provide you with more details at this step. Make sure you follow the instructions above and meet the timeframes allocated.

During the meeting, you will need to demonstrate effective communication skills including:
• speaking clearly and concisely
• using an appropriate tone and the correct syntax
• asking questions to identify required information and understand the views of others
• using active listening techniques to confirm understanding.
• selecting appropriate conventions and protocols (e.g. formal greeting, handshake etc.).

4. Develop a budget
First estimate the costs associated with the required resources for each task/activity in the WBS (identified at your team meeting). Then use your estimated costs to develop a budget for the project.
Use an appropriate estimation technique to estimate project costs (if you are using the case study, the organisation's policy and procedures stipulate that cost estimates should be made using a bottom-up estimating technique).
Your budgeted amounts should not exceed the maximum resource costs agreed on at your meeting.
Information should be obtained from a variety of sources:
• use the internet to research resource and activity costs.
• seek input from an external stakeholder (e.g. email a consultant for information, request a quote from a supplier etc.)
• use existing information (e.g. previous budget) to obtain information on resource and activity costs.
Use a digital technology application (e.g. MS Excel) to record your cost estimates and develop your budget. You may use the MS Excel template provided (Budget Template), or any other appropriate application used by your business. You will use this same workbook later on in this assessment to monitor project costs (step 6).

5. Develop a Cost Management Plan
Use the information you've gathered and developed in this assessment so far to develop a Cost Management Plan that includes:
• a brief introduction
• financial objectives of the project
• actions required to maintain financial objectives
• identify the resources required
• estimated and maximum project costs for required resources
• processes and procedures for monitoring actual expenditure against the budget (these processes must include the recording of actual expenses)
• potential causes for increased costs
• cost control procedures (variation rates and approval requirements).
You may use the template provided in the Simulation Pack, or any other relevant template.
Your plan should only include information that falls within the scope of your role and responsibilities (you've already defined these in step 2).
The text of your plan should be in grammatically correct English, written in an appropriate (polite, business-like) style.
Make sure you have answered all questions in Section 1.
You are required to attach certain documents as part of your evidence - review the documents you need to attach as outlined in Section 1 of the Project Portfolio.
Submit Section 1 to your assessor.

SECTION 2: MONITOR PROJECT COSTS

Occasion 1: When did you monitor the project costs?
Record any actual costs using the processes and procedures outlined in your Cost Management Plan.
Identify any cost variations.
Identify alternatives for adjusting resources and the budget to address the variations (at least two):
Evaluate the alternatives to choose the best action (to ensure financial objectives are met).
Implement the chosen action by updating your budget.
Review the cost management processes of the project so far.
What have you done well?
How can you improve?
Write a financial report that includes:
• a summary of the finances to date.
• current expenditure details
• variations and actions taken to address the variation
• a review of the cost management processes to date.

Occasion 2: When did you monitor the project costs?
Record any actual costs using the processes and procedures outlined in your Cost Management Plan.
Identify any cost variations.
Identify alternatives for adjusting resources and the budget to address the variations (at least two):
Evaluate the alternatives to choose the best action (to ensure financial objectives are met).
Implement the chosen action by updating your budget.
Review the cost management processes of the project so far.
What have you done well?
How can you improve?
Write a financial report that includes:
• a summary of the finances to date.
• current expenditure details
• variations and actions taken to address the variation
• a review of the cost management processes to date.

6. Monitor the project costs (early on in the Project life cycle) and take any necessary action
First record any actual costs to your budget using the processes and procedures outlined in your Cost Management Plan. Then use the recorded information to identify any cost variations. For at least one variation:
• identify at least two alternatives where resources and budget can be adjusted to accommodate the variation
• evaluate the alternatives
• implement the best way forward (by updating your budget).
Review the cost management processes followed by your team to date.
If you previously used the Budget Template, add the necessary information in the relevant spreadsheet using the same MS Excel workbook. Otherwise, use the processes and procedures of your specific organisation.
Make sure your actions match those outlined in your Cost Management Plan.
Assume you have permission to implement the budget and resource changes.
Change the version number of your cost estimate and budget workbook.

7. Provide an interim financial report to an appropriate stakeholder
Write a financial report that includes:
• a summary of the finances to date.
• current expenditure details
• variations and actions taken to address the variation
• a review of the cost management processes to date.
Draft an email to the stakeholder to share the report with them. In your email, include general information about the report (e.g. what it is, how it can be accessed such as a link to the cloud-based storage location or a reference to an attachment, any action required by the stakeholder).
You may use the template provided in the Simulation Pack for your report, or any other relevant template as per your organisation's requirements.
The text of your report and draft email should be in grammatically correct English, written in an appropriate (polite, business-like) style.

8. Repeat steps 6 and 7 for the later time period
Use the additional financial information from the Simulation Pack or your business to repeat steps 6 and 7 at a later period of time (before the project is completed).
Make sure you have answered all questions in Section 2.
You are required to attach certain documents as part of your evidence - review the documents you need to attach as outlined in Section 2 of the Project Portfolio.
Submit Section 2 to your assessor.
Assessor: see Project Portfolio Assessor Section 2 for guidance with marking. Provide feedback and if necessary, ask the student to make adjustments and resubmit their work.

9. Review the cost management processes
First record any final income/expenses to your budget, then review your financial reports (prepared in steps 7 and 8). Use the recorded information to:
• summarise the project outcomes
• identify any cost management issues over the project's life cycle (at least one)
• make recommendations for future improvements (at least three).

10. Submit your completed Project Portfolio
Make sure you have completed all sections of your Project Portfolio, answered all questions, provided enough detail as indicated and proofread for spelling and grammar as necessary.

Attachment:- Manage_Project_Cost.rar