COST MANAGEMENT PLAN

ATM ID: NAA RFT 2017/1058

Agency: National Archives of Australia

Category: 81110000

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 Table of Contents

1. Budgetary Assumptions _3__

2. Cost Management Plan _4__
3. Tools and Methods for the Cost Variation _4__
4. Detailed Budget Performance Report _6__
5. Replanning Project back to original budget _6__
6. Financial completion Activity _7__
7. Review of the Project Performance _8__
8. Issues Occurred on the Project _8__

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 1.0 Budgetary Assumptions

The budget assumptions for Destination: Australia project are:

 Overall budget of the project
 Expected income
 Limit in contingencies and tolerance
 Resources required for the project

1.1 Project Budget for entire WBS:

Resource Contingencies and Overheads/Indirect

WBS TASKS Resources cost Tolerances cost ( whole phase) Profit
  Human resources $20,000.00 plus or minus 8%    

  Equipment $8,000.00 plus or minus2%    

$4000
  Travelling fees $2,200.00  Plus or minus 5%   $3000
1- Initiation Research fees $4,000.00  Plus or minus 2%    
Professional service
  fees $2,400.00  Plus or minus 3%    
  Facility and Utilities $3,400.00  Plus or minus 10%    
  Human resources $4,000.00 plus or minus 10%    

  Equipment $2,400.00 plus or minus 5%    

2- Planning Travelling fees $3,400.00  plus or minus 10% $6000   $2000
  Research fees $25,000.00  plus or minus 10%    
Professional service
  fees $9,000.00  plus or minus 8%    
  Facility and Utilities $2,000.00  plus or minus 5%    
  Human resources  $3,000.00  plus or minus 11%    
 
  Equipment  $5,000.00  plus or minus 9%  
3 Execution Travelling fees  $4,000.00  plus or minus 4%    
 
  Research fees  $27500.00  plus or minus 12% $5000   $5000
Professional service  $10,000.0
  fees 0      
  Facility and Utilities  $8,000.00  plus or minus 10%    
  Human resources  $5,000.00  plus or minus 5%    
  Equipment  $8,000.00  plus or minus 8%    
4- Monitor and
Control Travelling fees  $4,500.00  plus or minus 4%    
 $28,000.0
  Research fees 0  plus or minus 13%   $3000   $1000
Professional service  $10,000.0
  fees 0  plus or minus 3%    
  Facility and Utilities  $7,000.00  plus or minus 11%    
  Human resources  $6,000.00  plus or minus 8%    
  Equipment  $8,000.00  plus or minus 5%    
5 - Closing Travelling fees  $7,000.00  plus or minus 2%   $1000   $50000

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  $28,500.0
  Research fees 0  plus or minus 7%    
Professional service
  fees $10,000.00  plus or minus 13%    
  Facility and Utilities  $8,000.00  plus or minus 10%    
           

2. Cost Management Plan

Steps for the cost management plan are:

 Develop work breakdown structure
 Identify project resources
 Estimate the costs
 Establish performance indicators
 Budgeting
 Cost recording procedures
 Establish cost control mechanism

3. Tools and Methods for the Cost Variation

Tools and methods for the cost variation are:

 Three-point estimating: Three point estimation is also known as program evaluation
and review technique. This deals with the uncertainties and risks. The three types of
estimations are: Most likely, optimistic and pessimistic
 Cost breakdown structure: This breakdown represents various costs in a project. As
cost breakdown structure is missing in most project tools, therefore it is not created in
a spreadsheet.

3.1 Three-point estimating

Three point estimation is also known as PERT. This three point estimation shows difference
in weighting for most likely estimate. Most likely is weighted 4 times more than the

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 optimistic and pessimistic estimates. There may be many unknowns during the research and
development of project, this three point technique helps in estimating cost in that situation.

Optimistic Most Pessimistic

WBS Tasks Cost Likely cost Expected Cost
1.0 Initiation 35100 40000 46000 40200
1.1 Establish Business case 7000   8000   9500   8100
     
1.2 Assess Feasibility of Project 15800 16900 19000 17100
1.3 Nominate Project Team 3500   5800   6500   5500
 
1.4 Develop Project Charter 8800   9300 11000   9500
     
2.0 Planning 55000 62500 66000 62000
2.1 Develop WBS   5000   5500   6000   5500
2.2 Create Project Timeline   8000   9000   9700   9000
     
2.3 Resource Plan 32000 37500 38800 37000
2.3.1 Determine Resource
Requirements   7000   7500   7800   7000
     
2.4 Budget Plan 10000 10500 11500 11000

E = (o + 4m + p ) / 6

where E is Estimate; o = optimistic estimate; p = pessimistic estimate; m = most likely

estimate

3.2 Cost breakdown structure

Choosing cost breakdown structure allows accurate level of information, so that managing
the project could be easy. CBS helps in managing and tracking the details such as: variances,
estimations, orders and many more. Any changes in the budget are considered as revisions,
change orders and transfers in the CBS technique. If there are errors in the financial aspects
due to the delay in schedules, this CBS automatically gets updated from WBS.

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 4 Budget Performance Report

WBS Tasks Planned Actual Variance

1.0 Initiation 40000 40600 -600
1.1 Establish Business case   8000   8100   -100
   
1.2 Assess Fe3asibility of Project 16900 17200   -300
1.3 Nominate Project Team   5800   5800   0
1.4 Develop Project Charter   9300   9500   -200
2.0 Planning 60000 59000 +1000
2.1 Develop WBS   5500   5300   +200
2.2 Create Project Timeline   8800   8500   +300
   
2.3 Resource Plan 33200 33200   0
2.3.1 Determine Resource
Requirements   7700   7700   0
   
2.4 Budget Plan 12500 12000   +500
       

5. Re-planning the Project

WBS Tasks Planned Actual Variance Replanned

1.0 Initiation 40000 40600 -600 41600
1.1 Establish Business case   8000   8100   -100   8300
1.2 Assess Fe3asibility of Project   16900   17200   -300   17500
1.3 Nominate Project Team   5800   5800   0   5800
1.4 Develop Project Charter   9300   9500 -200  10000
2.0 Planning 60000 59600 +400 61500
2.1 Develop WBS   5500   5300   +200   5500
2.2 Create Project Timeline   8800   8500   +300  9000
2.3 Resource Plan   27200   27200   0  27200
2.3.1 Determine Resource
Requirements   7700   7700   0   7700
2.4 Budget Plan   12500   12000  +500   12500
2.4.1 Categorize resources 10000   10000   0   10000

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 2.4.2 Establish a cost estimate   1000   1000   0   1000
2.4.3 Develop Cost Breakdown   1500 1500     0  1500
2.5 Quality Management Plan   1000   600 -400   1500
2.6 Risk Plan   5000   4800   -200   5800

5.1 Reasons to re-plan the Budget

Because of negatively planned project budget, re-plan of budget is done. Because of the
improper project budget, project faces loses instead of earning profits.
To improper project budget cause due to:
 Improper planning of budget in initial phase. Proper market research is important
while planning budget. As the market value changes, budgeting more than estimation
is necessary
 During the planning phase, errors may occur. Analyzing risks before showing its
impact on budget helps to keep proper budget planning.

5.2 Recommendations to overcome the Cost Variance

Recommendations are:
 Observing previous records
 Budgeting more than estimating
 Applying lessons learnt from past experience
 Proper analyze of market values
 Cost cuttings

6. Financial Completion Activity

The last phase of the project management process is closure phase. This phase verifies
whether the project went as planned and it helps in analyzing the outcome of the project as
required by stakeholders.
When delivering the project, elements that need to be considered are:
 Requirements of stakeholders
 Complete procurement closure
 Formal acceptance
 Final reporting
 Records

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  Lessons learned

7. Review of the project performances

The cost management process conducted was effective, as it helps in conducting estimations
of the cost. Though perfect and accurate estimation of project budget is impossible,
appropriate estimations are done by applying tools and techniques. Even though there are a
lot of uncertainties in the project such as schedule, scope and resources, these cost
management plan implemented can overcome the uncertainties and manages project budget.

8. Issues occurred on the Project

Recommended Action for next lesson Learnt/Raised

Date Description time By
 Systems are out of  Regular monitoring and
07/02/2021  date reviewing of equipment  IT manager
Scheduling time for project tasks
based on the process and
difficulty. Analysing the scope and
07/03/2021  Unrealistic deadlines estimate perfect task scheduling  Operational manager

References:
Fang Xie, Haitao Li, Zhe Xu, Multi-mode resource-constrained project scheduling with uncertain
activity cost, Expert Systems with Applications, 10.1016/j.eswa.2020.114475, 168, (114475), (2021
Davis Langdon (2012), Davis Langdon website, www.davislangdon.com (accessed 25 March) Di
Castri, G. (2012), International Roundup News, Vol. 2, Issue 2, pp.7-13, ICEC
Flyvbjerg, B. (2005), Policy and Planning for Large Infrastructure Projects, World Bank Policy
Research Working Paper 3781, December 2005.

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