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4 Project Budget and Cost Breakdown Structure

This document provides information about project budgets, cost breakdown structures, and approaches to estimating project costs. It discusses how project managers use budgets to estimate total costs, common budget estimation techniques like bottom-up and top-down, and how to create a detailed project budget breakdown. It also explains that a cost breakdown structure is a hierarchical map of project costs derived from the work breakdown structure. A CBS helps define cost elements and contingencies for each task.

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reoantion6
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294 views10 pages

4 Project Budget and Cost Breakdown Structure

This document provides information about project budgets, cost breakdown structures, and approaches to estimating project costs. It discusses how project managers use budgets to estimate total costs, common budget estimation techniques like bottom-up and top-down, and how to create a detailed project budget breakdown. It also explains that a cost breakdown structure is a hierarchical map of project costs derived from the work breakdown structure. A CBS helps define cost elements and contingencies for each task.

Uploaded by

reoantion6
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SPECS 512

Project Budget and


Cost Breakdown Structure

Jobil Jocson, uap


Course Facilitator
Project Budget
A tool used by PMs to estimate the total cost of the project. A Project
Budget template includes a detailed estimate of all cost that are likely to
be incurred before a project is completed.

Budget Budget Project Budget


Planning Tracking Management

Estimating cost Monitoring the Setting


and making expenses of the guidelines and
budget project during control
execution phase procedures

2
Approaches to Estimating a Project Budget
01 02 03 04 05

Bottom-up Top-Down Analogous Parametric Three Point


Estimation Estimation Estimation Estimation Estimation

Rate the Figure out the Analyze the data of Using data and Take the best,
individual total and then similar projects to project worst and
parts of the split it into task decide the cost variables to most likely
project and or milestones suggest the case estimates
then total total to do the
them up average

3
Creating a Project Budget
01 02 03 04 05

Breakdown Estimate each Add estimate Add Get


project into item in the together contingency approval
milestones and track list and taxes
task

4
Cost Breakdown Structure
A hierarchical map of the cost of the project. The cost breakdown
structure works off a work breakdown structure (WBS) by determining
the cost of deliverables and task.

Labor Material Equipment Overhead


Cost Cost Cost Cost

Money spent Any and all Equipment Hidden cost


on the people material that are being that are not
who execute bought by the used directly
the project project allocated to a
specific cost.
5
How to Make a CBS
01 02 03

Create a WBS Identify Cost Define


for each contingency
project task margin

6
Benefits of using CBS
01 02 03

Scope Schedule Risk


Management Tweaking Management

7
Typical Structure of a CBS
01 02 03 04 05

Project Level Major Cost Subcategory Cost Elements Cost Details


Categories and Work
Packages
Labor, Labor (direct cost Specific cost Specific cost
Materials, and indirect cost) elements elements with
Equipment, Materials (raw associated with associated
and etc. materials and a subcategory amount
purchased
components)
Equipment (rental
and maintenance)
8
Approaches in Structuring Cost
01 02

Locked Approach Unlocked


Approach

9
SPECS 512

End of Presentation

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