CEP53: PROJECT COST MANAGEMENT

1. How is the WBS used for estimating costs for the project? (5
marks)

The tasks that are captured in the WBS must be assigned resources to help
achieve the desired outcomes for that particular task. The total cost of using
that particular resource will depend on the type and the time that was estimated
/ indicated in the WBS. For example, two weeks were allocated in the WBS to
finish painting an entire house. Using the 8/80 rule and the hourly rate of a
painter, one can estimate the amount needed to pay the laborer(s) to complete
the task.

2. What is the importance of Contingency Reserves? (5 marks)

Contingency reserves are important to help safeguard you from any unknown
risks that may occur during the life cycle of the project. Whether there was an
error in the design, your estimations on resources were off, material prices went
up and so on, the contingency reserve is there to help cater for those extra
costs.

3. What is the purpose of a Cost Management Plan? (5 marks)

The purpose of this plan is to;

i. describe how the budget and cost estimates were achieved,

ii. decide who will be the delegated personal in charge of overseeing /
approving or changing the budget if necessary
iii. set out the procedures needed to be taken in case any risks to the budget
were to arise.
Basically the plan directs you on what and when to spend the project costs and
how to monitor and control it.

4. What are the things to report when reporting budget

performance? (5 marks)

Variation is the main concern when reporting budget performance as this report
measures how much you estimated for the entire project work against how
much you actually spent to get the project deliverables achieved. Some
additional information could be what task needed more resources to complete on
time or if a particular resource needed to be replaced to keep the project on
schedule.