1. Discuss why many information technology professionals may overlook project cost management and how this might affect completing projects within budget.
Information technology professionals do not understand basic accounting and finance principles to be able to do a net present value analysis return on investment and payback analysis. It should also be considered that new technologies or software development expenses are very inaccurate as it is hard to put a figure on something has not been developed. The problems they face may be they estimate too quickly, do not have the estimating experience, may be biased towards underestimating and management may require more accuracy. The book states that IT professionals understand the value of a balanced portfolio aligned with business objectives but lack a well-defined and consistent process for managing the origination, evaluation and execution of IT investments. As far as contemplating projects with budgets it would not be an accurate estimate of cost unless all the stakeholders are involved to make these determinations.
4. Explain what happens during the process to determine the project budget.
A project budget involves allocating cost estimates to individual work over the time of the project and is based on the WBS. The budget is determined using the cost estimates, basis of estimates, scope baseline, schedule, resource calendar, contracts and organizational process assets. The main goal is cost budgeting which creates a cost baseline for measuring performance and funding requirement and taking into consideration document updates. It is also important to understand how the company operates so the budget is created appropriately.
6. What is project portfolio management? Can project managers use it with earned value management?
Project portfolio management allows organizations to collect and control an entire suite of projects or investments as on set of interrelated activities. Project managers can use it with earned value management as it is a performance measurement technique that let them know how well the project is meeting scope, time and cost goals by entering actual information and then comparing it to a baseline.
7. Describe several types of software that project managers can use to support project cost management.
Spreadsheets are a common tool used for cost estimating, budgeting and control. Microsoft Project is a project management software that allows for the following to be created such as: cash flow, budgets, over budget tasks, over budget resources and earned value reports. Some project managers simply use the company’s accounting software and spreadsheets to receive more flexibility. They have also learnt to connect their accounting software to the project management software for more accurate information.
Subject: Project management,
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 25 November 2016
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