Cost Management Plan

Vinnie Yard Project

at
Ghazi Barotha

By Salman Lodhi

Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.

Project Charter..............................................................................................................................
Schedule Plan...............................................................................................................................
Introduction..................................................................................................................................
COST MANAGEMENT APPROACH........................................................................................
SCOPE DEFINITION..................................................................................................................
PROJECT SCOPE STATEMENT................................................................................................
WORK BREAKDOWN STRUCTURE......................................................................................
Grapes Production Trend..............................................................................................................
BASIS OF ESTIMATE..............................................................................................................
Project Funding Requirements...............................................................................................
MEASURING PROJECT COST............................................................................................
REPORTING FORMAT.........................................................................................................
COST VARIANCE RESPONSE PROCESS..........................................................................
COST CHANGE CONTROL PROCESS..............................................................................
PROJECT BUDGET..............................................................................................................
CONCLUSION AND RECOMMENDATIONS....................................................................

1. PROJECT CHARTER
Project
Project manager
Background

Vinny Yard
Salman Lodhi
The possibility of growing profitably new grapes varieties in
Pakistan is a growing reality, becoming day by day one of the

most important agriculture products request.

Business need and At the moment the export of this product is increasing every
business benefits

season and this trend is expected to follow this pattern for many
years to come. It is a small based project projected on a 50 Kanals

Scope

Land at Ghazi Barotha Near Attock with manpower of 15-20.

The scope of the project was to produce grapes as a venture and
bring awareness of the grapes production in area of Attock,
Pakistan amoung farmers so they can realize the true worth for

Deliverables
Project manager

their long term investment decisions for grape production.

Grapes
Due Date: 01-01-2016
The Project Manager, Salman Lodhi, is hereby authorized to
interface with the stakeholders as required, negotiate for
resources, delegate responsibilities within the framework of the
project, and to communicate with all contractors, suppliers and
management, as required, to ensure successful and timely
completion of the project. The Project Manager is responsible for
developing the project plan, monitoring the schedule, cost, and
scope of the project during implementation, and maintaining
control over the project by measuring performance and taking

Key Considerations

corrective action.
Signature
The project plan will be submitted and approved in accordance
with the milestone schedule below. Upon approval of the project
plan resources will be assigned to the project and work will
commence within 1 business day. The Project Sponsor must
approve any schedule changes which may impact milestones. A
detailed schedule will be included in the project plan.

2. SCHEDULE PLAN

Task Name

Duration

Start

Finish

Tue 1/1/13
Tue 6/1/13
Mon 11/1/13

Tue 5/1/13
Fri 10/1/13
Mon 15/1/13

Mon 16/1/13
Tue 26/1/13
Thu 1/2/13

Mon 25/1/13
Wed 30/1/13
Fri 15/2/13

Initiation
What type of Grapes to grow.
Fertilization of Land
Where to grow.

5 days?
5 days
5 days

Planning
Purchase of Land and Costing
Selection type of Grapes and costing
Irregation (Drip or Conventional)

10 day
5 days
15 days

Execution
Purchase of Grapes Stems.
Soiling
Spraying
Pruning
Layering
Weeding

10 day
10 day?
5 days?
4 days
3 day?
6 days

Sat 16/2/13
Wed 26/2/13
Wed 6/3/13
Wed 11/03/13
Tue 15/03/13
Thu 18/03/13

Monitoring & Controlling

Monitor & Control Project Work
Control Scope
Control Schedule
Control Costs
Control Quality
Control Risks

Closure

Mon 25/2/13
Wed 5/3/13
Wed 10/3/13
Mon 14/3/13
Tue 17/03/13
Thu 24/03/13

3. INTRODUCTION
The Project Manager will be responsible for managing and reporting on the projects cost throughout
the duration of the project. During the monthly project status meeting, the Project Manager will
review the projects cost performance for the preceding month. Performance will be measured using
earned value. The Project Manager is responsible for accounting for cost deviations. The Project
Sponsor has the authority to make changes to the project to bring it back within budget.

In this report I have only mentioned the cost management aspect of this project. This project
is been run by myself with support of my father. Right now the project is in Execution phase
the initiation and planning phase has almost been done. Some of the formats and standards
are set up for this project which will be discussed in this plan in the later stage.

4. COST MANAGEMENT APPROACH

Costs for this project will be managed at the 2nd level of the Work Breakdown Structure
(WBS). Control Accounts (CA) will be created at this level to track costs. Earned Value
calculations for the CAs will measure and manage the financial performance of the project.
Although activity cost estimates are detailed in the work packages, the level of accuracy for
cost management is at the 2nd level of the WBS. Costs may be rounded to the nearest Rupee
and work hours rounded to the nearest whole hour. The CA will all be handled by Accountant
as mentioned above.
Cost variances of +/- 0.1 in the cost and schedule performance indexes will change the status
of the cost to cautionary; as such, those values will be changed to yellow in the project status
reports. Cost variances of +/- 0.2 in the cost and schedule performance indexes will change
the status of the cost to an alert stage; as such, those values will be changed to red in the
project status reports. This will require corrective action from the Project Manager in order to
bring the cost and/or schedule performance indexes below the alert level. Corrective actions
will require a project change request and be must approved by the Project Sponsor before it
can become within the scope of the project.

5. Scope Definition
The scope for this project was defined through a comprehensive requirements collection
process. First, a thorough analysis was performed to gather the user requirements and

working of the current conventional system, from this information, the project sponsor
developed the project requirements documentation, the requirements management plan. The
data was collected from PCSIR and R & D Department of Agriculture.
Mainly expert judgment provided feedback was the most effective way to meet and
understand the direct requirement of end user and the product requirement.

6. PROJECT SCOPE STATEMENT

The project scope statement provides a detailed description of the project, deliverables,
constraints, exclusions, assumptions, and acceptance criteria. Additionally, the scope
statement includes what work should not be performed in order to eliminate any implied but
unnecessary work which falls outside the of the projects scope.
This project includes the Market study, user requirement gathering, testing, implementation,
training and an Operation for assisting end user. The main deliverable for this project is
GRAPES.

7. WORK BREAKDOWN STRUCTURE

In order to effectively manage the work required to complete this project, it will be
subdivided into activities. This will allow the Project Manager to more effectively manage
the projects scope as the project team works on the tasks necessary for project completion.
The project is broken down into FIVE phases:
7.1
7.2
7.3
7.4
7.5

Initiation
Planning
Executing
Monitoring & Controlling
Closure

Planning

WBS
Execution

Monitoring
&
Controllin
g

What type
of Grapes
to grow.

Purchase
of Land
and
Costing

Purchase
of Grapes
Stems.

Monitor &
Control
Project
Work

Where to
grow.

Selection
type of
Grapes
and
costing

Fertilizatio
n of Land

Control
Scope

Irregation
(Drip or
Conventio
nal)

Weeding

Control
Schedule

Spraying

Control
Costs

Pruning

Control
Quality

Layering

Control
Risks

Initiation

Soiling

Closing

Closure

Leve
l
1

WBS Code / Element

1.1.1.
Initiation
1.1.1.1. What type of Grapes to grow?
1.1.1.2. Where to grow.
1.1.2.
Planning
1.1.1.1. Purchase of Land and Costing
1.1.1.2. Selection type of Grapes and
costing
1.1.1.3. Irregation (Drip or Conventional)
1.1.3.
Execution
1.1.3.1. Purchase of Grapes Stems.
1.1.3.2. Fertilization of Land
1.1.3.3. Weeding
1.1.3.4. Spraying
1.1.3.5. Pruning
1.1.3.6. Layering
1.1.3.7. Soiling
1.1.4.
Monitoring & Controlling
1.1.4.1. Monitor & Control Project Work
1.1.4.2. Control Scope
1.1.4.3. Control Schedule
1.1.4.4. Control Costs
1.1.4.5. Control Quality
1.1.4.6. Control Risks
1.1.5.
Closing
1.1.5.1. Closure

8. GRAPES PRODUCTION TREND

The fig shows the response of production to the orchards age. As
the grapes orchards become older and older the production increase.
However, at certain age the production starts declining. The trend line
shows that on average the grapes orchards production increases with
increasing rate till it reaches to a mature age of 20 year, produces
optimal yield till 50 years and then start declining after 50 years.

Grapes production trend

9. BASIS OF ESTIMATE

Project: Vinny Yard

WBS Element: Initiation
Category Mater Labor
ial
What
Rs. 0
Rs. 0
type of
Grapes to
grow?
WBS Element: Planning
Category Materi Labor
al
Land/Gra
pes/Drip
Irrigation

100,00
0

20,000

Indirect
Costs

Base Cost

Reserve

Total
Cost

Rs.
10,000

Rs 15,000

Rs 5,000 Rs 20,000

Indirect
Costs

Base
Cost

Reserve

Total
Cost

20,000

$20,000

$10,000

$170,00
0

WBS Description: The project procurement is completed at this element.

WBS Element: Execution
Category Materi Labor
Indirect Base
Reserve Total
al
Costs
Cost
Cost
Fertilizati
Weeding
Spraying

50,000

50,000

10,000

10,000

10,000

130,000

Fundi
ng
Sourc
e
Self

Cost
Method
ology

Fundin
g
Source
Self

Cost
Method
ology
Parametr
ic

Fundin
g
Source
Self

Cost
Method
ology
Parametr
ic

Parametr
ic

10

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Pruning
Layering
Soiling
10. Project Funding Requirements
Project: SDR
Vinny Yard Project
Project Phase
Initiation

1st
Month
$20,00
0

Planning

2nd
Month

3rd
Month

4th Month

5th Month

$170,00
0

Executing

$130,000

Monitoring

$5,000

Closure

$5,000
Totals

$20,00
0

$170,00
0

$130,000

$5000

$5000

11. MEASURING PROJECT COST

Performance of the project will be measured using Earned Value Management. The following
four Earned Value metrics will be used to measure to projects cost performance:

Schedule Variance (SV)

Cost Variance (CV)

Schedule Performance Index (SPI)

Cost Performance Index (CPI)

If the Schedule Performance Index or Cost Performance Index has a variance of between 0.1
and 0.2 the Project Manager must report the reason for the exception. If the SPI or CPI has a
variance of greater than 0.2 the Project Manager must report the reason for the exception and
provide management a detailed corrective plan to bring the projects performance back to
acceptable levels.
Performance Measure

Yellow

Red

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Schedule Performance Index

Between 0.9 and 0.8 or

Less Than 0.8 or Greater

(SPI)
Cost Performance Index

Between 1.1 and 1.2

Between 0.9 and 0.8 or

than 1.2
Less Than 0.8 or Greater

(CPI)

Between 1.1 and 1.2

than 1.2

12. REPORTING FORMAT

Reporting for cost management will be included in the monthly project status report. The
Monthly Project Status Report will include a section labeled, Cost Management. This
section will contain the Earned Value Metrics identified in the previous section. All cost
variances outside of the thresholds identified in this Cost Management Plan will be reported
on including any corrective actions which are planned. Change Requests which are triggered
based upon project cost overruns will be identified and tracked in this report.
13. COST VARIANCE RESPONSE PROCESS

The Control Thresholds for this project is a CPI or SPI of less than 0.8 or greater than 1.2. If
the project reaches one of these Control Thresholds a Cost Variance Corrective Action Plan is
required. The Project Manager will present the Project Sponsor with options for corrective
actions within a due course of time. The Cost Variance Corrective Action Plan will detail the
actions necessary to bring the project back within budget and the means by which the
effectiveness of the actions in the plan will be measured. Upon acceptance of the Cost
Variance Corrective Action Plan it will become a part of the project plan and the project will
be updated to reflect the corrective actions.
14. COST CHANGE CONTROL PROCESS
The cost change control process will follow the established project change request process.
Approvals for project budget/cost changes must be approved by the project sponsor.
15. PROJECT BUDGET
The budget for this project is detailed below. Costs for this project are presented in various
categories...
Total Project Cost $320,000
Management Reserve (5%) $5000

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16. CONCLUSION AND RECOMMENDATIONS

The above figures of investment analysis shows that investment in grapes orchards has an
attractive return provided that orchards are properly managed in the light of advice of
agriculture experts. Grapes being low delta crop have the potential to replace the other high
delta fruit crops like apple, plum, apricot etc. to cope with acute water shortage. Keeping in
view the high returns from grapes orchards and acute water shortage, it is advisable to plant
grapes being a low delta and highly profitable fruit instead of other high delta fruits. There
is ample scope to increase the grapes yield per acre many fold which is quite below that of
other advanced countries.

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