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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]
Earned Value Calculations
Earned Value Formulas
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
Earned Value Chart
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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Chap07

  • 1. Chapter 7: Project Cost Management
  • 2.
  • 3.
  • 4.
  • 5. 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.
  • 6.
  • 7.
  • 8.
  • 9. 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.
  • 10.
  • 11. Sample Headcount Information to Help Estimate Resource Costs A large percentage of the costs of many IT projects are human resource costs.
  • 12.
  • 13. Table 7-3. Types of Cost Estimates
  • 14.
  • 15.
  • 16.
  • 17. Table 7-4. Business Systems Replacement Project Cost Estimate Overview
  • 18. Table 7-5. Business Systems Replacement Project Cash Flow Analysis
  • 19.
  • 20. Table 7-6. Business Systems Replacement Project Budget Estimates for FY97 and Explanations
  • 21.
  • 22.
  • 23. Figure 7-1. Cost Control Input Form for Business Systems Replacement Project
  • 24.
  • 27.
  • 28. Figure 7-2. Earned Value Calculations for a One-Year Project After Five Months
  • 30.
  • 31.
  • 32. Sample Enterprise Project Management Screen