Project Estimating and Cost Management

Learn the best ways to apply new tools for project estimating and cost management. Gain insights into best practices for progress monitoring and cost management, as well as for dealing effectively with external projects.

Parviz F. Rad, Ph.D. is the Distinguished Service Professor and Director of the Graduate Project Management Program at the Stevens Institute of Technology. A noted author and lecturer, he is the editor of The Project Management Journal®.

Preface

xi

Acknowledgments

xiii

Introduction

1

(10)

Project Scope and Objectives

2

(3)

Organizational Objectives

5

(1)

Project Selection

6

(5)

Deliverable-Oriented Work Breakdown Structure

11

(16)

Work Breakdown Structure

12

(1)

WBS Development Steps

13

(1)

The Division Bases

13

(2)

Case Example: WBS for an Industrial Complex

15

(1)

Comparison of the Different Bases

16

(1)

Process-Oriented Projects

17

(2)

Organizational Priorities

19

(2)

Semantics

21

(1)

Changing the Paradigm

22

(5)

Resource Breakdown Structure

27

(16)

Nomenclature, Dimensions, and Units

28

(1)

Resource Breakdown Structure

29

(2)

RBS Development

31

(1)

The Primary Division Basis

32

(2)

Lower-Level Division Bases with a Concentration on Human Resources

34

(2)

Estimating the Costs

36

(2)

Detailed Example

38

(5)

Estimating Models

43

(24)

Accuracy

47

(3)

Parametric Estimating

50

(3)

Modular Estimating

50

(1)

Parametric Model

51

(2)

Analogous Estimating

53

(9)

Ratio Estimating

54

(1)

The Three-Quarters Rule

55

(4)

The Square Root Rule

59

(2)

The Two-Thirds Rule

61

(1)

Range Estimating

62

(2)

Expert Judgment

64

(1)

Normalization

64

(3)

Progress Monitoring

67

(14)

Developing a Monitoring Plan

70

(3)

Elements of Monitoring

73

(2)

Earned Value

75

(3)

Productivity

78

(3)

Cost Management

81

(18)

Causes of Change

85

(2)

Feed-Forward Technique

87

(1)

Impact of Schedule on Cost

88

(6)

Lifecycle Costs

94

(1)

Impact of Project Risk

95

(4)

External Projects

99

(16)

Specifications

100

(2)

Contracts

102

(4)

Response to Specifications

106

(2)

Bidding

108

(2)

Project Costs

110

(2)

Direct Costs

110

(1)

Indirect Costs

110

(1)

Overhead

111

(1)

Allowance

111

(1)

Contingency

112

(1)

Project Audit

112

(3)

Bibliography

115

(2)

Index

117

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Project Estimating and Cost Management

Summary

Author Biography

Table of Contents

Supplemental Materials