Chap07

Chapter 7: Project Cost Management

Learning Objectives ,[object Object],[object Object],[object Object],[object Object]

Learning Objectives ,[object Object],[object Object],[object Object]

The Importance of Project Cost Management ,[object Object],[object Object],[object Object]

What Went Wrong? According to the San Francisco Chronicle front-page story, "Computer Bumbling Costs the State $1 Billion," the state of California had a series of expensive IT project failures in the late 1990s, costing taxpayers nearly $1 billion…ironic that the state which leads in creation of computers is the state most behind in using computer technology to improve state services. … The Internal Revenue Service (IRS) managed a series of project failures that cost taxpayers over $50 billion a year—roughly as much money as the annual net profit of the entire computer industry. … Connecticut General Life Insurance Co. sued PeopleSoft over an aborted installation of a finance system.

What is Cost and Project Cost Management? ,[object Object],[object Object],[object Object]

Project Cost Management Processes ,[object Object],[object Object],[object Object],[object Object]

Basic Principles of Cost Management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Table 7-1. Cost of Software Defects It is important to spend money up-front on IT projects to avoid spending a lot more later.

Resource Planning ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Sample Headcount Information to Help Estimate Resource Costs A large percentage of the costs of many IT projects are human resource costs.

Cost Estimating ,[object Object],[object Object],[object Object]

Table 7-3. Types of Cost Estimates

Cost Estimation Tools and Techniques ,[object Object],[object Object],[object Object],[object Object]

Constructive Cost Model (COCOMO) ,[object Object],[object Object],[object Object],[object Object]

Typical Problems with IT Cost Estimates ,[object Object],[object Object],[object Object],[object Object]

Table 7-4. Business Systems Replacement Project Cost Estimate Overview

Table 7-5. Business Systems Replacement Project Cash Flow Analysis

Cost Budgeting ,[object Object],[object Object],[object Object]

Table 7-6. Business Systems Replacement Project Budget Estimates for FY97 and Explanations

Cost Control ,[object Object],[object Object],[object Object],[object Object],[object Object]

Earned Value Management (EVM) ,[object Object],[object Object],[object Object]

Figure 7-1. Cost Control Input Form for Business Systems Replacement Project

Earned Value Management Terms ,[object Object],[object Object],[object Object]

Rules of Thumb for Earned Value Numbers ,[object Object],[object Object]

Figure 7-2. Earned Value Calculations for a One-Year Project After Five Months

Project Portfolio Management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Using Software to Assist in Cost Management ,[object Object],[object Object],[object Object]

Sample Enterprise Project Management Screen

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