Project Cost Management

KASUN NANDAPALA
Processes…
Estimate Costs
Determine Budget
Control Costs
Estimate Costs
Example 1
Suppose that you are supposed to manage a project in Badulla, of which the rainy
season is from November – January. The most likely scenario is that it would cost
the project by 10 working days of a 28-day working month. However, due to the
climate change happening there, there were roughly 6 working days of rain for each
month, however, there’s a possibility of raining for even 20 working days per month,
depending on the previous experiences. Assuming that the labour cost per day is Rs.
6000/=, estimate a reasonable labour cost for a project spanning in this time.
(Assume that this project has a 51-effective working labour days’ work, and the
labourers have to be paid even if they work or not.)
Determine Budget
Control Costs
Example 2
Suppose that you are requested to track the progress of a project. The planned
start date of the project was 16th August, and the project has started as planned.
However, when you visit the site on 25th August, it is observed that 75% of the
excavation is completed, and has incurred a cost of Rs. 28000/= for that. When you
check your project plan, by this date, it is supposed to totally complete the
excavation and 25% of the rubblework too. Suppose that BoQ values of excavation
and rubblework are Rs. 40000/= and Rs. 50000/= .respectively. Use the ‘Earned
Value Technique’ to answer the following questions.
(a) Find the Earned Value, Planned Value and Actual Cost by 25th August.
(b) Calculate ‘Cost Performance Index’ and ‘Schedule Performance Index’.
(c) Hence, comment on the performance of the project with respect to time and
cost.
 Example 3
The estimated cost, actual cost and cash receipt of a project is as given below.

1. Draw the curve of cost baseline

2. Draw the cumulative curve of actual expenditure
3. Draw the cumulative curve of cash receipt
4. Comment on the profit and the capital lock-up in this context of the project

Month 1 2 3 4 5 6

Estimated cost 300 400 700 1000 800 500

Actual cost 100 300 700 1200 900 500
Cash receipt 2000 0 1300 0 0 800
 Example 4
The estimated cost, actual cost and cash receipt of a project is as given below.

1. Draw the curve of cost baseline

2. Draw the cumulative curve of actual expenditure
3. Draw the cumulative curve of cash receipt
4. Comment on the profit and the capital lock-up in this context of the project

Month 1 2 3 4 5 6

Estimated cost 200 300 600 800 500 200

Actual cost 300 350 600 700 500 150

Cash receipt 500 0 0 0 0 2500