Budget Analysis and Cost Estimating

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Question Description

Scenario

For this assessment, choose either Option A or Option B. You do not need to do both. Both options will be graded using the same scoring guide.

Option A: Project Revive LLC is a consulting firm of highly charged and accomplished project managers whose main stream of revenue comes from managing the turnaround of failing projects. As a consultant with Project Revive LLC, you will study, analyze, and manage a failed project from NearlyFree.com. NearlyFree.com is a fictitious company and the project documents for this project scenario are located below. The NearlyFree.com project was originally scoped to develop and deploy an automated web-based training system for new employees to reduce the workload and cut down personnel resources required to complete the new employee orientation (NEO) training.

Use the NearlyFree.com project work breakdown structure to help identify deliverables and processes that need resources. It is important to know historical information regarding what types of resources were required for similar work. You can do research using the Internet to find similar projects. You will find the project justification and objectives in the project scope statement, which is listed among the resources below.

Option A Resources (use these artifacts for completing the activities in this course): I have attached files.

Your Role

For both Option A or B, you are the project manager.

Requirements

Microsoft Project is the recommended software tool for this course due to its wide industry acceptance and its use in many project management professional roles. To make this easier, you have the ability to download and install your own version of MS Project for use in this course. See the Software Preparation and Technology Access activity for more information.

Practice using MS Project in this course will prepare you for future professional PM roles and responsibilities; please use MS Project for those tasks supported by MS Project. If you have access to other tools such as MS Visio, MS PowerPoint, MS Word, or other project management software that you believe may still meet the requirements of this course, please discuss your selected alternative with faculty.

Use the PMBOK® Guide as the model for developing the deliverables.

Part 1: Budget Analysis Report

Deliverable: Create a budget analysis report of the current failed project.

Use the MS Project functionality (or other, approved software of your choice) to:

  • Display project summary information and report.
  • Create project reports.
  • Export project plan cost data into Excel.
  • Develop an analysis report including the following:
    • Analyze the current financial state using cost estimating techniques.
    • Estimate costs of individual schedule activities or work packages by reviewing WBS and associated project costs.
    • Identify failure points that occurred throughout the project.
Part 2: Cost Estimating Forecast Analysis

Deliverable: Create a project estimation report for the turnaround project.

At this point in the process you have been asked to report back to NearlyFree.com on your findings and recommendations with respect to project costs. Review the information you gathered and prepare a report for your client. This will be a what-if scenario or plan that you will propose to NearlyFree.com management for the project turnaround to succeed. In the report, do the following:

  • Copy the original NEO project schedule baseline and create a custom table to add your changes and modifications.
  • Display your proposed cost estimates and newly established cost baseline for the turnaround project, based on the Project Schedule [MPP].

As part of this report, address the following topics or questions, and where necessary, define assumptions you made:

  • Total cost of ownership—what it means to the project and to the business, how it is calculated, its role in the failed project, and your estimates for the turnaround project.
  • Return on investment—what it means to the project and to the business, how it is calculated, and your estimates for the turnaround project.
  • Project budget—an analysis of the failed project budget, techniques used to prepare your proposed project budget, and the proposed project budget.
    • Develop a new project budget with a more detailed assessment of the resources.
      • Establish a total cost baseline for measuring project performance.
  • Explain and justify the cost estimating techniques used.
  • Estimate contingency reserves.
Applicable Microsoft Project Functions
  • Create a custom table.
  • Updating a project plan.
  • Set a baseline.
  • Save an interim project plan.
  • Display project summary information and report.
  • Export project plan cost data into Excel.
  • Create Project "Current State" Analysis report.

Preparation

Use the software of your choice to develop the deliverables for this assessment.

This assessment has two parts and two deliverables:

  1. Develop a comprehensive "current state" budget analysis report.
  2. Develop a comprehensive cost estimating forecasting analysis report.

Deliverable Format

  • References: There is no set number of references required for this assessment. Use scholarly or academic sources where applicable.
  • Format:
    • Use Microsoft Project to obtain project costs information.
    • Use your choice of MS Word, MS Visio, or MS PowerPoint to develop the comprehensive analyses.
    • These analyses are professional documents and should therefore follow the corresponding Academic and Professional Document Guidelines [PDF], including single-spaced paragraphs.
    • Use APA style and format for references and in-text citations.

Evaluation

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria.

  • Competency 1: Apply project cost tools and techniques to ensure project success.
    • Analyze cost-estimating techniques.
    • Estimate costs of individual schedule activities or work packages.
    • Estimate the total cost of ownership and explain how it applies to the project.
    • Estimate return on investment and explain the calculation.
    • Develop new project budget.
    • Estimate contingency reserves.
  • Competency 4: Communicate effectively in a professional manner consistent with the standards of project management.
    • Explain cost-estimating techniques used.

Unformatted Attachment Preview

Project Charter Project Title: New Employee Orientation Project Start Date: 10/09/2007 Projected Finish Date: 01/22/2008 Budget Information: $25,000.00 Project Manager: Jeremy Lee JLee@nearlyfree.com ext 8000 Project Objectives To build an employee orientation learning module for the Human Resource department. It will be accessed through the company Intranet. This module will include at least one quiz and a signoff to document that new employees have completed their orientation and understood the training information. Approach The following is a list of milestones which represent success on this project • Kickoff meeting. • Requirements and Project Planning. • Design and Development. • Testing. • User Testing. • Stakeholder testing and presentation. • Design changes based upon testing information. • Final Integration Testing. • Roll out. • Project Close. Roles and Responsibilities Role Name Organization / Position Contact Information Project sponsor Jennifer Beal Project Sponsor E-mail: jbeal@nearlyfree.com Phone: X8999 Project manager Jeremy Lee Project Manager E-mail: jlee@nearlyfree.com Phone: X8000 Team resource Alice Yee Software Specialist E-mail: ayee@nearlyfree.com Phone: X8888 Page 1 of 2 Team resource Tom Johansen Webmaster E-mail: tjoh@nearlyfree.com Phone: X8777 Team resource John Sachs QA Administrator E-mail: jsac@nearlyfree.com Phone: X8666 Cheryl Gladstone HR Manager E-mail: cgla@nearlyfree.com Phone: X8555 Sign-off: The stakeholders initialed their names in table above. Comments: None. Page 2 of 2 Project Scope Statement Version History 1.01.0 10/25/2007 Project Name: Project NEO Prepared by: Jeremy Lee Date (MM/DD/YYYY): 10/25/2007 approved Project Scope Executive Summary The Scope of this project is to design an employee orientation module as requested by the Human Resource department to be used for new employee orientation. The information needs to be accessed through the company Intranet where new employees would review all company policies, take a quiz, and sign off on the new employee orientation process. The scope also includes successful testing and acceptance by the Human Resource department. Business Objectives 2.1 Product Description (Solution) A NearlyFree.com New Employee Orientation Module for the Human Resource department will be designed that can be accessed using the company Intranet for new employee orientations. During the orientation process, new employees will review the presentation presented by Human Resources followed by a quiz and sign off the orientation process. 2.2 Business Objectives The Human Resource department would like to automate the new employee orientation process by providing electronic documentation for orientation presentations, and maintain this database to track and document successfully completed orientations. Project Description Project Scope 3.1 Project Scope Includes (list Deliverables): • Design a web based Human Resource module for new employee orientations. • Integrate HR module with the company Intranet. Page 1 of 5 • • • • • Migrate existing hard copy presentations into electronic format. Create quiz to assess new employees on their understanding of HR processes. Create electronic sign-off for a successfully completed orientation. Create online help to assist new employees during the orientation process. Provide documentation to the Human Resource department to help with future changes to the orientation material. Does Not Include The scope of this project does not include anything that is not maintaining the website 3.2 External Dependencies All project requirements including the hard copy documents of the orientation material to be promptly provided by Cheryl Gladstone. 3.3 Assumptions All necessary hardware and software is already in place. The NearlyFree.com Employee Orientation module will be created and integrated into the Human Resource section of the Intranet. 3.4 Constraints No new requirements to be added by the sponsors without affecting the project timeline and budget. Project Milestone • • • • • • • • • • • • • • • Milestone Target Date Project Start Project Charter Work Breakdown Structure Project Scope Statement Project Schedule Responsibility Assignment Matrix Project Schedule Resources Project Cost Estimate Project Quality Statement Stakeholder Analysis Communication Plan Risk Matrix Final Project Plan Software Orientation Learning Module Complete Final Integration Testing Complete 10/09/2007 10/09/2007 10/19/2007 10/26/2007 11/01/2007 11/06/2007 11/09/2007 11/16/2007 11/23/2007 11/28/2007 11/30/2007 12/07/2007 12/13/2007 1/18/2008 1/17/2008 Page 2 of 5 • • • • Documentation provided to Human Resource department Training Human Resource on new module complete Project Complete Post Mortem Lessons Learned 1/21/2008 1/21/2008 1/21/2008 1/22/2008 Project Approach Standard 5.1 Primary Plans The nearlyfree.com project will have the following formal written plans: • Project schedule. A firm schedule of events will be provided when all the requirements have been satisfactorily met. • Cost Estimate. Cost estimates will also be provided when all requirements are met. • Responsibility Assignment Matrix. • Quality Statement. A list of quality objectives is provided in the Quality Statement. • Communication Plan. A spreadsheet of the communication plan is provided in the Communication Management Section. • Risk Analysis. A probability of risk associated with the project will be provided. • Change Management. The change control procedures are included in the project plan. Project-Specific Briefly describe how each of the following will be handled. Provide links to relevant documents as appropriate. Modify example text provided or enter your own. 5.2 Change Management The change control procedures as documented in the Change Management Plan will be consistent with the Project Management Methodology and consist of the following processes: • A Change Request Log will be established by the Project Manager to track all changes associated with the project effort. • All Change Requests submitted via Change Request Form will be assessed to determine possible alternatives and costs. • Change Requests will be reviewed and approved by the project owner. • The effects of approved Change Requests on the scope and schedule of the project will be reflected in updates to the Project Plan. • The Change Request Log will be updated to reflect current status of Change Requests. 5.3 Communication Management The following strategies have been established to promote effective communication within and about this project. Specific Communication policies will be documented in the Communication Plan. Page 3 of 5 • • • • • The Project Manager will present project status to the project Sponsors on a weekly basis; however, ad hoc meetings will be established at the Project Manager’s discretion as issues or change control items arise. The Project Manager will provide a written status report to the project Sponsors on a monthly basis and distribute the Project Team meeting minutes. The project Sponsors will be notified via e-mail of all urgent issues. Issue notification will include time constraints, and impacts, which will identify the urgency of the request for service. The Project Team will have weekly update and status meetings to review completed tasks and determine current work priorities. Minutes will be produced from all meetings. All electronic Project Documents will be maintained in central storage accessible by all project stakeholders. 5.4 Resource Management The project team will produce a Resource Management Plan that will document the following: • Lists all major goods and services required in the project along with cost estimates and quality information. • Indicates which goods and services will be obtained from sources outside the Organization. • Indicates who is assigned to the project and when. Authorizations The Scope Statement is approved by the: • Project Sponsor Jennifer Beal • Project Manager Jeremy Lee Project performance baseline changes will be approved by the: • Project Sponsor Jennifer Beal • Project Manager Jeremy Lee Project deliverables will be approved or accepted by the: • Project Sponsor Jennifer Beal • Key Stakeholders Cheryl Gladstone Specific task responsibilities of project resources will be defined in the Responsibility Assignment Matrix. Project Scope Statement Approval / Signatures Project Name: NEO Project Project Manager: Jeremy Lee The purpose of this document is to provide a vehicle for documenting the initial planning efforts for the project. It is used to reach a satisfactory level of mutual agreement between the Project Page 4 of 5 Manager and the Project Sponsors and Owners with respect to the objectives and scope of the project before significant resources are committed and expenses incurred. I have reviewed the information contained in this Project Scope Statement and agree: Name Role Signature Date Jeremy Lee Project Manager e-sig 11/01/2007 Jennifer Beal Project Sponsor e-sig 11/01/2007 Cheryl Gladstone HR Manager e-sig 11/01/2007 The signatures above indicate an understanding of the purpose and content of this document by those signing it. By signing this document, they agree to this as the formal Project Scope Statement document. Page 5 of 5 Quality Statement To: Jennifer Beal, Alice Yee, Cheryl Gladstone, John Sachs, and Tom Johansen From: Jeremy Lee Re: NearlyFree.com NEO Project Quality Statement PMO Quality Management Discipline and Policies The PMO upholds the IT Service Oriented Architecture and Enterprise which is the basic framework and structure for all IT-related activities and projects. The philosophy is service, centered on customer satisfaction and quality. NEO Project will implement and abide by the PMO Quality Policies. Quality Policies will be implemented from the planning phase and throughout the different project phases to project close. Ensuring Process Quality Attention will be given to detailed documentation of the development process. Program code test and review meetings will be scheduled regularly to make the processes flow run smoothly and eliminate any misunderstandings from the team. Exit phase meetings will be scheduled for documentations and lessons learned for future use. Internal audits will be performed regularly. These are done not only for IT processes, but also for Finance and Human Resources as well. Quality Control Testing Techniques • • • Expert Review Inspections Audits Testing Cycles • • • • Unit testing Integration testing System testing User acceptance testing Conclusion Page 1 of 2 NEO Project will comply with the PMO quality policies and guidelines. The Project Manager will make sure all the project team and all resources are in compliance with these strict policies and guidelines. Jeremy Lee Signed by PM Page 2 of 2 Statement-of-Work Template Table of Contents 1. 2. Executive Summary ............................................................................................................................ 1 Statement of Work ............................................................................................................................. 2 Work Location: Describe where the work must be performed. Period of Performance: Specify when the work is expected to start and end, working hours, number of hours that can be billed per week, and where the work must be performed. Deliverables Schedule: List specific deliverables, describe them in detail, and specify when they are due. Quality Standards: Specify any company- or industry-specific standards that are relevant to performing the work. Acceptance Criteria: Describe how the buyer organization will determine if the work is acceptable. Special Requirements: Specify any special requirements such as hardware or software, level of personnel experience, travel requirements et cetera. 3. Project Management Plan. 3.1 Scope Statement......................................................................... Error! Bookmark not defined. 3.2 Components in scope and not in scope ................................... Error! Bookmark not defined. 3.3 Detailed Requirements and List of Deliverables ......................... Error! Bookmark not defined. 3.4 Acceptance Criteria ..................................................................... Error! Bookmark not defined. 3.5 Definition of Fixed-Price Contract. 3.6 Incorporation of Project Schedule ............................................... Error! Bookmark not defined. 4. Change Management Plan ................................................................................................................. 5 5. Organization Structure and Definition………………………………………………………………...........5 6. Client Team Roles and Responsibilities ............................................. Error! Bookmark not defined. 7. Constraints, Dependencies, and Assumptions................................... Error! Bookmark not defined. 8. Communications Plan ........................................................................ Error! Bookmark not defined. 9. Resource Plan .................................................................................... Error! Bookmark not defined. 10. Risk Assessment Plan ...................................................................... Error! Bookmark not defined. 11. Training and Technical Requirements ............................................... Error! Bookmark not defined. 11.1 Training Costs ............................................................................. Error! Bookmark not defined. 11.2 Software/Hardware/Other Costs ................................................. Error! Bookmark not defined. 12. Quality Plan........................................................................................ Error! Bookmark not defined. 13. Project Handover ............................................................................... Error! Bookmark not defined. 13.1 Final delivery and Production ........................................................ Error! Bookmark not defined. 14. Problems After Client Acceptance ..................................................... Error! Bookmark not defined. 15. Client Inputs and Other Comments ................................................... Error! Bookmark not defined. 16. Glossary and Terminology List .......................................................... Error! Bookmark not defined. 17. Appendices ........................................................................................ Error! Bookmark not defined. A. Signature and Approvals................................................................. Error! Bookmark not defined. B. Change Control for the Statement of Work .................................... Error! Bookmark not defined. C. Distribution List ............................................................................... Error! Bookmark not defined. Page 1 of 5 Statement-of-Work Template Project Name: Prepared by: Date (MM/DD/YYYY): Version History (insert rows as needed): Version Date Comments (MM/DD/YYYY) 1.0 1. Executive Summary 2. Statement of Work Definition of Fixed-Price Contract Work Location Describe where the work must be performed. Period of Performance Specify when the work is expected to start and end, working hours, number of hours that can be billed per week, and where the work must be performed. Deliverables Schedule List specific deliverables, describe them in detail, and specify when they are due. Page 2 of 5 Statement-of-Work Template Quality Standards Specify any company- or industry-specific standards that are relevant to performing the work. Acceptance Criteria Describe how the buyer organization will determine if the work is acceptable. Special Requirements Specify any special requirements such as hardware or software, level of personnel experience, travel requirements et cetera. 3. Project Management Plan (You can use MS Project Schedule in this section.) 4. Change Management Plan 5. Organization Structure and Definition 6. Client Team Roles and Responsibilities 7. Constraints, Dependencies, and Assumptions Page 3 of 5 Statement-of-Work Template 8. Communications Plan 9. Resource Plan 10. Risk Assessment Plan 11. Training and Technical Requirements 12. Quality Plan 13. Project Handover 14. Problems After Client Acceptance Page 4 of 5 Statement-of-Work Template 15. Client Inputs and Other Comments 16. Glossary and Terminology List 17. Appendices Page 5 of 5 ...
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