Quiz 9: Resourcing Projects

Business

Fixed cost is the cost that is not dependent on the size of a project. Fixed costs are those costs which remains same irrespect of the volume or size of the work. For example, if an individual wants to buy a project, the cost remains same regardless of how much an individual is using it. Also, non recurring costs are also not dependent on the project size. These are those costs which will occur only once during a project such as developing a design which once approved will guide the peoject team. These costs make plan how to do a particular work. While costs like variable cost, direct cost, indirect costs are costs associated with size of the project. If the project is large, then cost will be large whereas if the project is small then cost involved is small.

• Cost management planning establishes the performance standards , and feedback compares its actual performance with the planned performance, and the control uses feedback to actually evaluate all deviations from the plans. • The cost management has a role of providing the information to help in mainly identifying opportunities for an improvement and provides an evaluation of progress that is made in implementing actions designed to create the improvement. • This plan helps the company adhere to the budget constraints and judiciously utilize the resources.

Bottom-up estimating involves estimating the cost of a project by aggregating the costs of the bottom most levels. It starts from lower-level components and moves up to estimate the total cost. To create a bottom-up plan, first create a work breakdown structure as shown below: Level-1 img Now, determine the level-2 activities, as shown below: Level-2 img Now, find the cost of lower-most activities, as shown below: img Add the costs under each head to get the combined cost of each level-1 activities. The cost of purchase ingredients, preparation and delivery are $141, $26 and $10 respectively. Combine these to get the total cost of the project i.e. $141 + $26 + $10 The total cost of the project is $177.

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