Q no1 : It has been said that time component is the one of the most difficult but important task

why might this so be ?

Ans:Time is the most important component in project life cycle. Every project has an element of newness about it there will be risks and difficulties to be surmounted. These require decisions and possibly trade-offs between competing project objectives such as cost and time. The successful project is one which satisfies the client and the stakeholders, and is seen to do so in its most important dimension, quality but on the required and specified time period. Managers must decide what to do, when, where, how, and by or with whom. Time management is the process of monitoring, analyzing, and revising your plan until it works. Effective planning is a skill that takes time to acquire. It is difficult to implement because you have no one but yourself to monitor how effectively you are using your time. Everyone has the same amount of time - 168 hours per week. How that time is managed is up to the discretion of each person. One extension agent joked that he was so busy taking time management courses, he had little time left to manage. Effective time management involves philosophy and common sense. Time is not a renewable resource - once it is gone, it is gone forever. To function effectively, managers have to be able to prioritize and replace less important tasks with more important ones. Most of us work for pay for only 1,800 hours per year. Effective and efficient time management encourages us to achieve and be productive while developing good employee relations. Every project that involves more than one person requires a project team to get the work done. Without doubt, building a motivated project team will be your primary and most critical task, because the success of the project will rely heavily on choosing the right team members and gaining their commitment to the project's objectives. If possible, assembling the project team and dividing the project's scope into manageable pieces (developing a work breakdown structure) should go hand in hand. In this way, help and ideas are obtained in developing the project plan and, as the skills required to execute the project plan become apparent, so can additional people resources be identified and recruited as necessary.

In any organizing effort, managers must choose an appropriate structure at appropriate time. Organizational structure is represented primarily by an organizational chart. It specifies who is to do what and how it will be accomplished at a specific time. There are several aspects to organizing time, structures, chain of command, degree of centralization, and role specification.

Q no 2: You have been tasked with outlining how to determine the estimated costs for projects .you could use any approach you wish but there should be some guiding principles or rules that you would use. What principles or rules would you follow when understanding such a task?
In a world of limited funds, as a project manage you're constantly deciding how to get the most return for your investment. The more accurate your estimate of project cost is, the better able you will be to manage your projects budget. Therefore, estimating a projects costs is important for several reasons:

It enables you to weigh anticipated benefits against anticipated costs to see whether the project makes sense.

It allows you to see whether the necessary funds are available to support the project. It serves as a guideline to help ensure that you have sufficient funds to complete the project.

A project budget is a detailed, time-phased estimate of all resource costs for your project. You typically develop a budget in stages from an initial rough estimate to a detailed estimate to a completed, approved project budget. On occasion, you may even revise your approved budget while your project is in progress. Projects budget includes both direct and indirect costs. Direct costs include the following:

Salaries for team members on your project Specific materials, supplies, and equipment for your project Travel to perform work on your project Subcontracts that provide support exclusively to your project

Indirect costs fall into the following two categories:

Overhead costs: Costs for products and services for your project that are difficult to subdivide and allocate directly. Examples include employee benefits, office space rent, general supplies, and the costs of furniture, fixtures, and equipment. You need an office to work on your project activities, and office space costs money. However, your organization has an annual lease for office space, the space has many individual offices and work areas, and people work on numerous projects throughout the year. Because you have no clear records that specify the dollar amount of the total rent thats just for the time you spend in your office working on just this projects activities, your office space is treated as an indirect project cost.

General and administrative costs: Expenditures that keep your organization operational (if your organization doesnt exist, you cant perform your project). Examples include salaries of your contracts department, finance department, and top management as well as fees for general accounting and legal services.

Suppose youre planning to design, develop, and produce a company brochure. Direct costs for this project may include the following:

Labor: Salaries for you and other team members for the hours you work on the brochure Materials: The special paper stock for the brochure Travel: The costs for driving to investigate firms that may design your brochure cover Subcontract: The services of an outside company to design the cover art

Indirect costs for this project may include the following:

Employee benefits: Benefits (such as annual, sick, and holiday leave; health and life insurance; and retirement plan contributions) in addition to salary while you and the other team members are working on the brochure

Rent: The cost of the office space you use when youre developing the copy for the brochure

Equipment: The computer you use to compose the copy for the brochure

Management and administrative salaries: A portion of the salaries of upper managers and staff who perform the administrative duties necessary to keep your organization functioning

ESTIMATION OF COST BY USING HISTORICAL INFORMATION: One of the most transparent ways of estimating the cost of a project is to base it on previous work. If your company has completed a similar project recently, all the required costing information is available from the project files. If you don't have such a project, other work your company has done in the past can help determine the cost of similar work on the new project. If a local business that is not a competitor has completed a similar project, it might be willing to help. Where available, historical data often gives the most accurate prediction of future costs. Historical information is proven information and can come from several places: Project files Past projects within the performing organization can be used as a reference to predict costs and time. Caution must be taken that the records referenced are accurate, somewhat current, and reflective of what was actually experienced in the historical project. Commercial cost-estimating databases provide estimates of what the project should cost based on the variables of the project, resources, and other conditions. Team members may have specific experience with the project costs or estimates. Recollections may be useful, but are highly unreliable when compared to documented results. This is a coding system used by the performing organizations accounting system to account for the project work. Estimates within the project must be mapped to the correct code of accounts so that the organizations ledger reflects the actual work performed, the cost of the work performed, and any billing (internal or external) that was charged to the customer for the completed work. Acknowledging the Cost of Risk The impact of risks, for positive or negative effect, must be evaluated and considered in the cost estimates. Risks, can impact the cost of the project. For example, should a risk come into play, the mitigation of the risk may require adding several activities to squelch the risk. The expense of the activities would add cost to the project.

Management, customers, and other interested stakeholders are all going to be interested in what the project is going to cost to complete. There are several approaches to cost estimating, which well discuss in one moment. First, however, understand that cost estimates have a way of following the project manager around especially the lowest initial cost estimate. The estimates youll want to know for the PMP exam, and for your career, are reflective of the accuracy of the information the estimate is based upon. The more accurate the information, the better the cost estimate will be. Unit Costs Small or simple projects can be evaluated using a cost-per-unit that is characteristic of the project. The characteristic unit is a measure of the size of the project that is indicative for the particular project. It might be a cubic foot, a square foot or a work station. Typical applications are for building costs, paving, renovating or for standard systems such as data processing. Costs are a dollar amount per unit. To get the total cost, you decide how large the building or surface is or how many people will be working on the data. Multiply that by the unit cost to get the total. You can get typical unit costs from prospective suppliers or from industry associations.

Qno

3 : What does effective communication of cost estimates requires?

Ans : A key strategy for achieving this objective is completing projects on budget and on time.

This requires effective cost management of communication of both. 2.1 Purpose of an Estimate program budget is an aggregation of individual project budgets. The cost estimate is the foremost support document for building a projects budget and one of the most important factors against which the success of the project will be measured. The primary purpose of any cost estimate is to provide the rationale for a project budget. Estimates therefore must reflect the anticipated cost of the entire project in sufficient detail to define the future financial obligations.

If the communication is not effective then the whole cost will be waste by the passage of time . cost and effective communication are directly associated with each other . As a project manager

a manager must take several decision regarding to the series of project life cycle. In a project if any stage a manager fail to complete the defined task on a specific time , cost incurred in this project may be waste . Estimation of cost is one of the key issue . a manager must communicate properly and effectively with other clients.

Qno 4 : cost management involves the project budget so costs need to be estimated . What items or functions should be included as costs?
Ans . A project budget is a detailed, time-phased estimate of all resource costs for your project. You typically develop a budget in stages from an initial rough estimate to a detailed estimate to a completed, approved project budget. On occasion, you may even revise your approved budget while your project is in progress. Projects budget includes both direct and indirect costs. Direct costs include the following:

Salaries for team members on your project Specific materials, supplies, and equipment for your project Travel to perform work on your project Subcontracts that provide support exclusively to your project

Indirect costs fall into the following two categories:

Overhead costs: Costs for products and services for your project that are difficult to subdivide and allocate directly. Examples include employee benefits, office space rent, general supplies, and the costs of furniture, fixtures, and equipment. You need an office to work on your project activities, and office space costs money. However, your organization has an annual lease for office space, the space has many individual offices and work areas, and people work on numerous projects throughout the year. Because you have no clear records that specify the dollar amount of the total rent thats just for the time you spend in your office working on just this projects activities, your office space is treated as an indirect project cost.

General and administrative costs: Expenditures that keep your organization operational (if your organization doesnt exist, you cant perform your project). Examples include salaries of your contracts department, finance department, and top management as well as fees for general accounting and legal services.

Suppose youre planning to design, develop, and produce a company brochure. Direct costs for this project may include the following:

Labor: Salaries for you and other team members for the hours you work on the brochure Materials: The special paper stock for the brochure Travel: The costs for driving to investigate firms that may design your brochure cover Subcontract: The services of an outside company to design the cover art

Indirect costs for this project may include the following:

Employee benefits: Benefits (such as annual, sick, and holiday leave; health and life insurance; and retirement plan contributions) in addition to salary while you and the other team members are working on the brochure

Rent: The cost of the office space you use when youre developing the copy for the brochure

Equipment: The computer you use to compose the copy for the brochure Management and administrative salaries: A portion of the salaries of upper managers and staff who perform the administrative duties necessary to keep your organization functioning

Cost management involves the series of cost which we taken into consideration .

Q no 5: Operational staffs are the people actually doing the job in each of the projects centres. These people are in the best position to identify problems, constraints or issues relating to current project budgets and to advise financial personnel of requirements for further budgets to help priorities resource needs for the next project management costing exercise. They should

be included in consultative processes for advising on cost information when monitoring income and expenditure against the project budget baseline. Comment on this statement and the implications for expertise in the organization .
Ans: Human resource and their importance Operational staff is human resource. Human resource is our greatest assets . According to Scott, Clothier and Spriegal, The objectives of Human Resource Management, in an organisation, is to obtain maximum individual development, desirable working relationships between employers and employees and employees , and to affect the molding of human resources as contrasted with physical resources. The basic objective of operational staff is to contribute to the realisation of the organisational goals. However, the specific objectives of operational staff managers are as follows : (i) To ensure effective utilisation of Resources and allocation of costs . (ii) To establish and maintain an adequate Estimation Cost and relationship between the seriese of lifecycle. (iii) To generate maximum output in the specific planned budget the operational staff. (vi) To identify the monitoring the cost incurred in the project life cycle Operational staff is responsible for the estimation of cost , estimation of budget . A group of people form a consultant team and consult to the needed clients . these are the employees who are responsible for budgeting and estimating the cost , allocation of resources from planning to controlling stage till the project is not closeout and delivered to the clients . FUNCTIONS OF OPERATIONAL STAFF. The main functions are Managerial Functions To manage the project from the feasibility stage to the appraisal and controlling stage .

Following are the managerial functions of operational staff. Planning : The planning function of department pertains to the steps taken in determining in advance personnel requirements, personnel programmes, policies etc. After determining how many and what type of people are required, a personnel manager has to devise ways and means to motivate them. Directing : Directing is concerned with initiation of organised action and stimulating the people to work. The personnel manager directs the activities of people of the firm to get its function performed properly. A personnel manager guides and motivates the staff of the organisation to follow the path laid down in advance. Controlling : It provides basic data for establishing standards, makes job analysis and performance appraisal, etc. All these techniques assist in effective control of the qualities, time and efforts of workers.

Q no 6: What purpose does the Earned Value Technique serve why is it important and how should it be reported .
Ans: Earned Value Management

Earned Value Management (EVM) is a method of determining resource expenditures alone whether youre over or under budget and whether youre ahead of or behind schedule. On complex projects, EVM is a useful way to identify areas you should investigate for possible current problems or potential future problems. Earned value technique Application EVM will use three performance parameters to measure project performance: 1. Planned Value (PV) This is the budget, broken out over the life cycle of the project. 2. Earned Value (EV) This is the planned or budget value that you have earned at

different points in time, measured by looking at how much work has been completed. 3. Actual Costs (AC) This is the actual costs incurred to date for the work. Calculation of EVU Using the three performance parameters (PV, EV and AC), we will calculate two variances for expressing project performance: 1. Cost Variance (CV) = Earned Value (EV) Actual Costs (AC) 2. Schedule Variance (SV) = Earned Value (EV) Planned Value (PV)

We can also express this information in the form of an index: 3. Cost Performance Index (CPI) = EV / AC 4. Schedule Performance Index (SPI) = EV / PV

An index makes it easy to read the performance results; i.e. if you are above 1.0, then this is favorable performance and if you are below 1.0, this is unfavorable performance.

Q no 7: ensssuring cost objectives remain achievable is an important aspect of internal controls .what are the broader issues associated with internal controls?
Internal control has four main objectives: Internal controls are essential to a well-managed, well-functioning entity. Their purpose is to enable to:

Accomplish its mission and reach its objectives, Produce accurate, reliable data for decision-making, Comply with statutes, laws and policies, and Safeguard its assets

In an internal control management must address factors such as cost, performance, aesthetics, schedule or time-to-market, and quality. The importance of these factors will vary from product to product and market to market. And , over time, customers or users of a product will demand more and more, e.g., more performance at less cost. Cost will become a more important factor in the acquisition of a product in two situations. First, as the technology or aesthetics of a product matures or stabilizes and the competitive playing field levels, competition is increasingly based on cost or price. Second, a customer's internal economics or financial resource limitations may shift the acquisition decision toward affordability as a more dominant factor. In either case, a successful product supplier must focus more attention on managing product cost. The management of product cost begins with the conception of a new product. Typically sixty to seventy percent of a product's cost or life cycle costs are committed based on decisions made during concept or architecture development. Eighty-five to ninety percent of a product's cost or life cycle cost is committed by the time that the product has been designed and its manufacturing process has been developed. Potential actions related to manufacturing initiatives, automation, overhead reductions, and general and administrative expenses may only affect the remaining ten to fifteen percent of the product's cost. Therefore, once a product goes into production, relatively little latitude exists to reduce the cost of a product without going back and making changes to the design of the product and its manufacturing process. Thus the strategy of rushing to put a product into production and then going back and trying to cost reduce it later, delays profitability and incurs additional non-recurring development costs.

Q no8: The tranfer of assets liabilities and records is part of the close out procedures.why is close out necssary ?
Ans: The contracting authority should, in the bid documents, clearly specify in a separate section what is required to meet Substantial Performance and all of the documentation that will be required at the time of closeout for owner occupancy or other intended use. Grouping this information together in a separate section of the specifications is a simple way to clarify for all

members of the project team what is required to be done, by whom, to achieve substantial and total performance. Instructions for Substantial Performance should make reference to the Construction Lien Act and not paraphrase the Sections of the Act. This Statewide Procedure defines the steps that agencies shall follow to deliver information resulting from the Closeout of an agency reported project . The information shall be presented to enterprise funding authorities and other interested parties with the results of the project. The transfer of assets and liabilities and records is a close out procedure . close out is nesccary because the assets and liabilities and other resources must be disclose on the specific time to the shareholders and to the concern party . Any or all process-related assets, from any or all of the organizations involved in the project that are or can be used to influence the projects success. These process assets include formal and informal plans, policies, procedures, and guidelines. The process assets also include the organizations knowledge bases such as lessons learned and historical information

Q no9:How does the review of cost records within a review of project outcomes assist the organization.
Ans : Projects consume resources and resources have costs . people assigned to work on the project, facilities and equipment used by the project, and other direct costs. Projects should also recognize indirect costs; i.e. receiving benefits from resources without a direct association between the resource and the project. For example, projects may benefit from administrative support or the use of common facilities without incurring a direct charge to the project. We need to account for all resources consumed by the project, both direct and indirect. As we incur actual costs, we need to accumulate and compare costs to the budget. Therefore, a process and system should be in place for Costs Include the estimated cost at completion, the actual cost at

completion, and the variance between the two. Time spent compiling a business case that includes a cost and benefit analysis is an extremely valuable investment. Such an analysis educates leadership on the big picture of the project, sets

expectations for costs, and, hopefully, shows the expected return on investment. Ultimately, the business case is the justification that undertaking the project is worthwhile. The cost records must reflect the projects outcomes . cost records donot reflects only paperwork they reflect the fair picture of the project outcomes . A good manager must have ability to relize and identified wether the project cost reflects the project outcomes or not . therefore we can use cost benefit analysis for this reason that how much cost variences are identified and either these are postive or negative with respect to the performance and implementation of the project .

Q no 10: The preparation , effort and care that goes into a report should reflect it usage . Comment on this statement .
Ans:This statement is right that it should be reflect the preparation , effort and care that goes into a report should reflects it usage . Project management is a carefully planned and organized effort to accomplish a specific (and usually) one-time effort, for example, construct a building or implement a new computer system. Project management includes developing a project plan, which includes defining project goals and objectives, specifying tasks or how goals will be achieved, what resources are need, and associating budgets and timelines for completion. It also includes implementing the project plan, along with careful controls to stay on the "critical path", that is, to ensure the plan is being managed according to plan. Project management usually follows major phases with various titles for these phases), including feasibility study, project planning, implementation, evaluation and support/maintenance. (Program planning is usually of a broader scope than project planning, but not always. this is a huge effort which a manager and group of people do for the success of the projects . Therefore the manager making the report of the whole project its must be nessary that its effort and care put into process of project planing to the project implementation should reflects the usage . When we do planing we have to implment this practically in the ecnomics world . if things are not truly refelect with practicall seniaros then all the efforts will be useless.

Qno11: Why is that the rgrdless of level of detail,the supporting documentation should prvide a clear, professional and complete picture by which the cost estimate was derived ?
Ans: Because there is a chance of fraudmental and fake details . it should be necssary to the managers to disclose all the details vouchers and supporting documents to the shareholders and to the stakeholders and as well to the clients . It is the principle of professionalism to give true and fair picture to the clints .

Q no12: Why could cost estimates vary in their accuracy?

The cost estimation and accuracy are varying because estimtion is the budgeted cost and when the project is implemented the the cost will be varry . actual cost may be different from the actual cost . therefore , it will happen in many seniaros estimated cost and the budgeted cost varrying to different to different organization.

Q no13:What can the cost management plan establish?

Ans: The Cost Management Plan can establish : By identify the costs and effort estimates of the project BY identify factors that will tend to increase the costs or effort BY describe procedures that will be used to deal with increases to the cost and effort.

Q no 14: What process are included in project cost management?

Ans: Project cost management (PCM) is a method that uses technology to measure cost and productivity through the full life cycle of enterprise level projects. PCM encompasses several specific functions of project management including estimating, job controls, field data collection, scheduling, accounting and design.

Beginning with estimating, a vital tool in PCM, actual historical data is used to accurately plan all aspects of the project. There are 4 processes in this knowledge area including 1. Planning Cost Management 2. Estimating Costs 3. Determining Budget 4. Controlling Cost As with all processes there are inputs, tools and techniques, and outputs associated with Project Cost Management.

Q no 15:What are expenses controls and why are they important ?

Ans: Cost controls starts by the project identifying what their costs are and evaluate whether those costs are reasonable and affordable. Then, if necessary, they can look for ways to cut costs through methods such as cutting back, moving to a less expensive plan or changing service providers. The cost-control process seeks to manage expenses ranging from initial stages to the final stage of the project. Cost control and reduction refers to the efforts business managers make to monitor, evaluate, and trim expenditures. These efforts might be part of a formal, company-wide program or might be informal in nature and limited to a single individual or department. In either case, however, cost control is a particularly important area of focus for small businesses, which often have limited amounts of time and money.

Q no 16:What does forcasting involves?

Ans: The use of historic data to determine the direction of future trends. Forecasting is used by companies to determine how to allocate their budgets for an upcoming period of time. This is typically based on demand for the goods and services it offers, compared to the cost of producing

them. Investors utilize forecasting to determine if events affecting a company, such as sales expectations, will increase or decrease the price of shares in that company. Forecasting also provides an important benchmark for firms which have a long-term perspective of operations. characteristics or features of forecasting are as follows:Forecasting in concerned with future events. It shows the probability of happening of future events. It analysis past and present data. It uses statistical tools and techiques. It uses personal observations. Steps in Forecasting

Procedure, stages or general steps involved in forecasting are given below:Analysing and understanding the problem : The manager must first identify the real problem for which the forecast is to be made. This will help the manager to fix the scope of forecasting. Developing sound foundation : The management can develop a sound foundation, for the future after considering available information, experience, type of business, and the rate of development. Collecting and analysing data : Data collection is time consuming. Only relevant data must be kept. Many statistical tools can be used to analyse the data. Estimating future events : The future events are estimated by using trend analysis. Trend analysis makes provision for some errors. Comparing results : The actual results are compared with the estimated results. If the actual results tally with the estimated results, there is nothing to worry. In case of any major difference

between the actuals and the estimates, it is necessary to find out the reasons for poor performance. Follow up action : The forecasting process can be continuously improved and refined on the basis of past experience. Areas of weaknesses can be improved for the future forecasting. There must be regular feedback on past forecasting.