20+ SAMPLE Project Cost in PDF
Project Cost
20+ sample project cost, what is a project cost, types of project costs, tips on project cost, how to create project cost, what is the key to having the right project cost, why is a project cost important.
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1. know the scope of work, 2. provide an estimate, 3. calculate the costs, 4. review the budget, share this post on your network, you may also like these articles, 43+ sample business introduction letters in pdf | ms word | google docs | outlook | apple pages.
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9+ Business Project Plans – PDF, Word, Docs
- 9+ Simple Project Plan Examples – PDF, DOC
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Business Start-Up Project Plan Template
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Purpose of a Project Plan
- breaking down complex processes into a number of simpler components,
- providing clarity for obscure or ambiguous tasks in the project,
- providing a single point of reference for everyone involved in the project,
- enforcing analyses of the sequence and nature of events,
- providing a baseline which execution of the project can be compared to, and
- anticipating possible events and providing pre-planned means of avoiding them.
Basic Business Project Plan Example
Business Project Plan Example
Project Work Plan Template Example
Project Planning Template Example
Education Project Plan Structure Example
Health Bluetooth Event Tracker Project Plan Example
Elements of a Project Plan
1. project scope planning, 2. delivery schedule planning.
- Defining the tasks/activities.
- Sequencing the tasks/activities.
- Estimating the required resources.
- Estimating the each task duration.
- Developing the schedule.
3. Project Resources Planning
- What kinds of people are required to complete the project—necessary quantity, competencies?
- What should they do—roles and responsibilities?
- Whom will they report to? This means that the human resource plan will determine and document what are the specific requirements for each position that they need to fill. This will help ensure that the people working on the project are equipped with the right knowledge, skill set, experience, etc., that they will be handling once assigned to the project.
4. Project Cost Planning
- people, equipment, facilities, etc., required to complete given activity;
- inflation, exchange rates applicable for context of the activity.
- What all assumptions are made?
- What all constraints are applied?
- What all parameters formed as a basis of estimate
- What is the confidence level of estimate? And Why?
5. Project Quality Planning
- Quality Process and Policies
- Cost-Benefit Analysis
- Cost of Quality
- Quality Metrics
- Quality Checklist
- Control Charts
6. Supporting Plans
- Risk Management Plan – This plan deals with how risks will be handled should they are arise on the duration of the project. It explains the following along with necessary details that will make it understandable for everyone involved: the risk identification, risk assessment, risk responses, and risk management.
- Communication Plan – The communication plan helps ensure that appropriate channels are established in order to let correct information flow top-down as well as bottom-up manner.
- Procurement Plan – This plan documents purchase policy with regards to purchase process, buy/lease/rent decisions, vendor selection, negotiation, financial concurrence, duration, legal concurrence, etc. It should also determine the roles authorized to make tendering process, financial and legal concurrence, and approval/rejection decision.
Project Execution Plan Example
Project Planning Worksheet Example
Project Plan Format Example
How to Create an Effective Project Plan
- Explain the project plan to stakeholders and clearly discuss its key components.
- Clearly define the roles of responsibilities of everyone or every position involved in the project.
- Hold a kickoff meeting to gather the stakeholders in order to discuss all that the project entails.
- Develop a coherent and straightforward scope statement.
- Develop a scope baseline that comes from the deliverable of the WBS.
- Create the schedule and cost baselines.
- Create baseline management plans.
- Develop the staffing plan or human resource plan.
- Analyze project quality as well as the risks.
- There should be clear and efficient communication.
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Planning, Startups, Stories
Tim berry on business planning, starting and growing your business, and having a life in the meantime., business plan financials: starting costs.
It’s really important to have an idea of what you need before you start. Continuing with my series on standard business plan financials , startups need to project starting costs. Starting costs set up a starting balance, which is necessary to plan cash flow. And the starting costs are critical to determining whether a startup can bootstrap or needs outside funding. For existing companies that already have financial results, projections start with the expected ending balance of the previous period. But for startups, it’s about starting costs.
Starting costs are essentially the sum of two kinds of spending. You can estimate them both in two simple lists:
- Startup expenses : These are expenses that happen before the beginning of the plan, before the first month of operations. For example, many new companies incur expenses for legal work, logo design, brochures, site selection and improvements, and signage. If there is a business location, then normally the startup pays rent for a month or more before opening. And if employees start receiving compensation before the opening, then those disbursements are also startup expenses.
- Startup assets : Typical startup assets are cash (the money in the bank when the company starts), business or plant equipment, office furniture, vehicles, and starting inventory for stores or manufacturers.
A Simple Starting Costs Example
I’ve used a bicycle store as an example in several posts that are part of this series of standard business plan financials. Here’s a visual in spreadsheet form, of sample starting costs for a hypothetical bicycle store.
Notice that the lists for estimating starting costs, on the left in the illustration above, are matched to another list of starting funding, on the right side of the illustration. Books have to balance, so the initial estimates need to include not just the money you spend, but also where it comes from. In the case above, Garrett had to find $124,500, and you can see that he financed it with Accounts Payable, debt, and investment in various categories.
Another Simple Starting Costs Example
Here is another simple example: the starting costs worksheet that Magda developed for the restaurant I used for a sample sales forecast . Magda’s list includes rent and payroll, the same as in her monthly spending, but here they are included in starting costs because these expenses happen before the launch.
I included rent and payroll because they point out the importance in timing. The difference between these as startup expenses and running expenses is timing, and nothing else. Magda could have chosen to plan startup expenses as a running worksheet on expenses, starting a few months before launch, as in the illustration below. The launch in this case is early January, so the expenses for October through December are startup expenses. I prefer the separate lists, because I like the way the two lists create an estimate of starting costs. But that’s an option.
The LivePlan Alternative
If you’re a LivePlan user, the LivePlan interface assumes this method and has a more intuitive interface than the spreadsheet version I’m showing in this post. For LivePlan, you start your plan when you start spending, regardless of launch date. So the spending you do for rent and salaries and such, before launch, is part of the flow, as above. Also, LivePlan has its own guided way of helping you figure out what assets you need, how much they cost, and how you are going to finance starting costs, to set up your balance. And the LivePlan cash flow estimator will help you decide how much cash you need, so you don’t have to follow the spreadsheet method here (below).
How to Estimate Your Starting Costs
Obviously the goal with starting costs isn’t just to track them, but to estimate them ahead of time so you have a better idea, before you start a new business, of what the financial costs might be. Breaking the items down into a practical list makes the educated guess a lot easier. Ideally, you know the business you want to start, you are already familiar with the industry, so you can do a useful estimate for most of the startup costs from your own experience. If you don’t have enough firsthand knowledge, then you should be talking to people who do. For others, such as insurance, legal costs, or graphic design for logos, call some providers or brokers, and talk to partners; educate those guesses.
Starting Cash is the Hardest and Most Important
How much cash do you need in the bank, as you launch? That’s usually the toughest starting cost question. It’s also prone to misinformation, such as those alleged rules of thumb you can find everywhere, saying you need to have a year’s worth of expenses, or six months’ worth, before you start. It’s not that simple. For most businesses, the startup cash isn’t a matter of what’s ideal, or what some expert says is the rule of thumb – it’s how much money you have, can get, and are willing to risk.
The best way is to do a Projected Cash Flow while leaving the supposed starting cash balance at zero, which shows how much (at least in theory, according to assumptions) the startup really needs in cash to support the business as it grows, before it reaches a monthly cash flow break-even point. Magda did that to determine the $12,000 needed as starting cash for her restaurant. Note how, in the illustration here, the lowest point in cash is slightly less than $12,000:
That low point comes, theoretically, in the third month of the business, March. The low point is $11,609. Obviously that’s just an educated guess, but it’s based on assumptions for sales forecast, expense budget, and important cash flow factors including sales on account and purchasing inventory. So it’s better than a stab in the dark, or some rule of thumb. Just as an example, the total spending with the estimates shown here, the theoretical “year’s worth of spending,” is $182,000 (which you don’t see on the illustration, by the way, but take my word for it). The total for the first six months is $93,000. If Magda sticks to those old formulas, she can’t start the business. She is able to raise enough money, between loans and her savings, to put $12,000 into the starting cash balance. So that’s what she does. Then she launches and continues to have her monthly reviews, and watch the performance of all key indicators very carefully.
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Estimating Cost of a Project: Techniques and Examples
Estimating cost is an important process in project management as it is the basis for determining and controlling the project budget. Costs are estimated for the first time at the beginning of a project or even before a project has started. Subsequently, the (re-)estimation of the project cost is repeated on an ongoing basis to account for more detailed information or changes to the scope or timeline.
For instance, if the earned value management measures that are used for controlling project cost indicate significant variances from the budget, a re-estimation of the cost and schedule and a revisiting of the overall budget can be inevitable.
The methods introduced in this article are tools and techniques of the “Estimate Costs” process that is part of PMI’s Knowledge Area “Project Cost Management” (see PMBOK®, 6 th edition, ch. 7.2).
What Is a Cost Estimate?
Rough order of magnitude vs. definitive estimate, estimate to complete (etc) and estimate at completion (eac), when are cost estimated, why is cost estimation important in project management, comparison of estimation techniques, expert judgment , analogous estimating , parametric estimating, bottom-up estimating, three-point estimating.
A Cost estimate is a quantified expectation of how many resources are required to complete a project or parts of a project.
Such cost estimates are often expressed in currency units. However, other units such as man-days can also be used if the currency amounts are not applicable or irrelevant.
There are different types of cost estimates. The Project Management Body of Knowledge lists the rough order of magnitude (ROM) and the definitive estimate. Both types differ in respect of their accuracy, the project phases in which they are used as well as the available tools and techniques. Some projects use additional, sometimes industry-specific types of estimates.
Cost estimating involves different tools and techniques which typically include
- Expert judgment,
- Analogous estimating,
- Parametric estimating,
- Bottom-up estimating,
- Three-point estimating, and
- Cost of quality.
Read on to learn the details of these techniques, supplemented with examples and practical considerations.
What Are the Types of Cost Estimates?
According to the PMBOK®, there are 2 types of cost estimates:
- Rough order of magnitude (ROM) with an accuracy of -25% to + 75% (other frameworks quote a range of +/-50%) and
- Definitive estimate with an accuracy range of -5% to +10%.
Some sources also list so-called preliminary estimates and budget estimates as further gradations of estimate types. There are also industry-specific types of estimates such as design and bid estimates in construction projects ( source ). However, the current PMI project management framework only refers to the 2 above-mentioned types.
If the budget has to be revisited part way through a project, a so-called estimate to complete (ETC) is determined.
The obvious difference between these 2 types of estimates is the accuracy: the ROM is rather inaccurate with a broad range of possible outcomes. It is therefore typically used in project initiation phases where a ballpark figure is sufficient to get a project started.
The definitive estimate is determined in the course of the project when more information and resources for accurate estimates are available.
Read this article for more details on the ROM and the differences between ROM and definitive estimate .
If partway in a project it turns out that the budget baseline (based on previous estimates) cannot be met, a re-estimation of the project cost is required.
This is done by determining an estimate to complete (ETC) which is used to calculate a new estimate at completion (EAC) that replaces the initial budget at completion and thus becomes the new cost baseline of a project.
Costs are estimated at different points in time throughout the project. The PMBOK states that the process is performed “periodically throughout the project as needed” (source: PMBOK®, 6 th edition, ch. 7.2).
The first point to estimate cost is during the initiation phase, e.g. when the project business case or the project charter is created. For these documents, a project manager has to determine the amount of resources that is required to complete the project.
As the information that is available at that point is usually not very detailed, the project manager will likely end up producing a rough order of magnitude estimate rather than a definitive estimate. Later in the project when more information is available, this order of magnitude estimate will be replaced with a definitive estimate.
After the project initiation phase, the cost will be re-assessed during the planning phase, using the techniques introduced in this article.
In subsequent phases, costs are typically (re-)estimated if relevant new information and details become known or if changes to the project scope or timeline occur. One of the common reasons for re-estimating cost is, for instance, when the indicators of the project controlling suggest that the original budget baseline cannot be met.
Estimating Activity Durations: Definition, Methods, Practical Uses
Estimating costs is one of the core activities of project management and planning. This is because a project is defined as being subject to at least three fundamental constraints : scope , budget and time. Cost estimates are obviously addressing the budget constraint; hence they are highly relevant for the management of a project. The initial rough cost estimate is usually included in the project charter as well as in the business case of a project.
The estimation of costs is also necessary to compute the project budget which is subject to the approval of the project sponsor(s). In fact, the process “determine budget” uses a technique called “cost aggregation” which directly refers to the outputs of the “estimate cost” process.
Cost estimates are the basis for allocating budget to work packages and deliverables which can be politically sensitive within a project as well as among its stakeholders. Therefore, budget determination and assignment require some stakeholder involvement, communication and, in many cases, their approval.
In addition, cost estimates are input parameters for the earned value and variance analyses as well as forecasting of project costs .
Tools and Techniques for Estimating Project Cost
This section provides an overview of the tools and techniques for estimating project costs. These methods refer to chapter 7.2.2 of PMI’s Project Management Body of Knowledge .
Click on the links to the detailed articles on these techniques to find further explanations and practical examples.
This table compares the approaches to estimating project costs and highlights the differences between these techniques.
This technique is suggested by the PMBOK (ch. 4.1.2.1) as a way to produce a cost estimate.
If you or your team have experience with the kind of work that is in the scope of a project, you can use expert judgment to produce an estimate. This requires a certain level of familiarity with the subject of a project and its environments such as the industry and the organization.
Expert judgment can be applied to both bottom-up and top-down estimating. Its accuracy depends greatly on the number and experience of the experts involved, the clarity of the planned activities and steps as well as the type of the project.
Two examples of expert judgment are:
- Estimating the rough order of magnitude at the beginning of a project. At that time, estimates are often performed top-down due to a lack of team members. more accurate estimation techniques (such as parametric estimating) may also not be available due to a lack of data.
- (Re-)estimating the efforts needed to generate the deliverables of a work breakdown structure (WBS) by asking those responsible for work packages and activities to estimate their resource requirements. This type of expert judgment can lead to comparatively accurate results.
Besides being an estimation technique on its own, expert judgment is also inherent to the other estimation techniques. For instance, if the comparability of previous work and the current project is assessed or adjustments to parametric estimates are determined.
Analogous estimating refers to the use of observed cost figures and related values in previous projects (or portions of a project). In order to be accurate, the type and nature of these reference activities must be comparable with the current project.
“Analogous estimating, also called top-down estimating, is a form of expert judgment.” Source: Heldman, Kim. PMP: Project Management Professional Exam Study
This technique uses historical data in the form of values and parameters to determine the expected resource requirements of a current project. The historic values are adopted for the current work and can be adjusted for differences in scope or complexity. Analogous estimating is categorized as a gross value estimating approach.
In general, analogous estimates are used if a project has access to historical data on similar types of work while the details and resources for more accurate estimates in the current project, such as parametric or bottom-up estimating, are not available.
Analogous Estimating | Definition, Examples, Pros & Cons
Parametric estimating is a statistical approach to determine the expected resource requirements. It is based on the assumed or proven relationship of parameters and values. Simple examples are the building cost per square foot in construction projects or the implementation cost per data field in IT projects.
If, for instance, the cost of implementing a new data field in an IT system were $20,000 according to historical data, and a project required 15 new data fields, the total cost of this part of the project would be 15 x $20,000 = $300,000.
The input data can be obtained from previous projects or external data sources such as industry benchmarks or publicly available statistics.
In practice, this technique is employed with a broad variety of sophistication and accuracy. It can be used with a simple ‘rule of three’ calculation but also in conjunction with a complex statistical or algorithmic model that may consider multiple quantitative and qualitative parameters for detailed regression analyses.
In projects that do not use an explicit statistical correlation analysis, some expert judgment is required to assess whether it would be reasonable to apply the historic parameters to the current project. Complexities of projects and activities vary and may therefore require certain adjustments.
For instance, building a highway in a mountainous region likely produces a higher cost per mile than in a flat area. IT development projects in complex IT architectures or systems tend to require more resources than a less complex environment.
Another consideration concerns the expertise and experience of the project team. If a previous project was delivered by highly skilled and experienced resources while the current team is just at the beginning of its learning curve, using unadjusted historic data may understate the estimated cost.
Similar to analogous estimates, adjustments can be made to adapt the parametric estimates to the current project.
Depending on the quality of the input data and its applicability to the current type of work, the parametric estimation technique can produce very accurate figures. However, the higher the accuracy desired the more resources are needed to perform the data gathering and statistical analyses.
Parametric Estimating | Definition, Examples, Uses
Bottom-up estimation refers to a technique that involves estimating the cost at a granular level of work units. The estimates for all components of a project are then aggregated in order to determine the overall project cost estimate.
In practice, these estimates are often performed at the lowest level of the work breakdown structure (WBS), e.g. for work packages or even activities.
While there is no clear rule on who should be performing this estimation, it seems to be a good practice in project management: asking those project team members who are operationally in charge of the respective work packages or activities to estimate there on work.
Thus, this approach to estimating costs often comes with significantly higher accuracy than top-down estimations. However, obtaining and aggregating these granular estimates normally requires some resources and can potentially become a political challenge, especially in large or complex projects.
Three-point estimating is a technique that usually leverages on bottom-up estimates, analogous or expert estimates. The concept requires three different points of estimates: the optimistic (best case), pessimistic (worst case) and the most likely cost estimate.
Based on these 3 points, a weighted average cost estimate is determined that overweighs the “most likely” point. This can be done by assuming a triangular distribution, a PERT or beta distribution.
Read this article for further explanation and examples of this technique.
In this article, we have discussed the techniques of cost estimating as suggested by the PMBOK. Note that the level of detail and granularity of the estimates usually increases throughout the project.
In the initiation phase, the rough order of magnitude (ROM) is often the only type of estimate that can be obtained. Definitive estimates will usually require techniques such as analogous, bottom-up and parametric estimating that may only become available in later stages of a project.
Parametric and bottom-up estimates are usually the techniques that provide the most accurate cost projections. They are commonly used if the budget needs to be revisited and replaced with a new estimate at completion.
When a budget is determined and approved, earned value analysis and variance analysis help project managers control the cost and value generated in a project. You will find more details on the measures and the techniques in this article .
Free Project Cost Templates
Smartsheet Contributor Andy Marker
July 4, 2021
We’ve rounded up 15 of the most useful cost management templates, available in Microsoft Word and Excel, Adobe PDF, and Google Sheets versions. All templates are completely customizable and free to download.
Included on this page you’ll find project cost estimating spreadsheet templates , a project cost tracker template , and construction project cost templates , as well as IT project cost templates for estimation and cost benefit analysis.
Project Cost Estimating Templates
Parametric project cost estimating template.
Download Parametric Project Cost Estimating Template
Microsoft Excel | Microsoft Word
Parametric cost estimating is a reliable method of cost estimation for projects with predictable tasks and standard rates that can be expressed in units, such as work hours or product numbers. This template separates project costs by products and labor. Each section shows the number of units, price per unit, and total cost for each item or task. The template will then automatically calculate subtotals and display the total estimated project cost at the top of the template.
Three-Point Project Cost Estimate Template
Download Three-Point Project Cost Estimate Template — Microsoft Excel
Utilize the three-point estimating method to determine project expenses based on optimistic, pessimistic, and most likely costs. The template calculates weighted averages for each activity and the total project cost. Add notes to each line item to create a detailed estimate.
Activity Cost Estimate Template
Download Activity Cost Estimate Template
Microsoft Word | Adobe PDF
Create a list of estimated costs for all activities and resources required to complete your project. This cost estimating template shows direct and indirect expenses, contingency funds, and an estimated cost range for each item. Document the estimation method used, any assumptions and constraints, and your confidence rating. The template provides a simple table format for organizing and planning project costs.
Project Cost Management Templates
Project cost management plan template.
Download Project Cost Management Plan Template
This project cost management plan report template provides a detailed outline from which you can develop your own customized template. Sections include an introductory summary, spending limits, cost variance planning, management approach, reporting processes, change control, and project budget. The template is broken down into subsections, and tables make it easy to present data in a comprehensive and easily readable report.
Project Cost Control Template
Download Project Cost Control Template — Microsoft Excel
This project cost control sheet allows you to track budgeted versus actual costs, whether you’re managing product prices, hourly rates, or other project expenses. It also shows item quantities, budgeted rates, actual expenses, pending costs, and forecasted total costs for each individual item, as well as the project as a whole. The template displays amounts for project budget, actual costs, and projected costs at the top for quick reference.
Project Cost Schedule Template
Download Project Cost Schedule Template — Microsoft Excel
Create a project cost schedule that lists total costs allocated for each item, along with the time frame for distributing those costs. Use the 12-month calendar to view the dollar amounts allotted for a given week or month. This template works as both a planning and tracking tool to help you anticipate future issues, adapt to project changes, and ensure that costs stay on track and within budget.
Project Cost Tracking Template
Download Project Cost Tracking Template
Microsoft Excel | Google Sheets
This project cost tracker template provides both a detailed spreadsheet and a visual chart that shows a snapshot comparison of actual vs. budgeted expenses. Group your project costs by category, and list fixed costs or unit rates for each item. Enter actual expenses as you accrue them to track how far project costs are over or under budget.
Construction Project Cost Templates
Construction project cost tracking spreadsheet.
Download Construction Project Cost Tracking Spreadsheet Template — Microsoft Excel
This tracking spreadsheet functions as both a project cost estimate and budget template. The spreadsheet includes example categories and tasks, ranging from planning and site prep to interior finish work. Compare estimated and actual costs for individual items and the entire project. Keep track of vendors and other responsible parties, as well as task status and amounts due. The template displays summaries of total costs and payments at the top.
Construction Project Cost Comparison Template
Download Construction Project Cost Comparison Template — Microsoft Excel
This cost comparison template enables you to compare bids on a project and evaluate potential costs. The template shows the base bid amount for each party, as well as bids for proposed additive or deductive alternatives. Check boxes help you track qualifications and other bid requirements. Ultimately, by viewing a compilation of bids, you can easily compare potential costs and identify the most competitive bidders.
Multi-Unit Construction Project Estimate Template
Download Multi-Unit Construction Project Estimate Template
Microsoft Excel | Microsoft Word | Adobe PDF
This multi-unit estimate template is divided into sections for on-site and off-site construction and includes sample categories. List work tasks or materials needed under each category, and add estimated costs; the Excel version of this template will automatically calculate the projected subtotal. Then add percentages for fees, insurance, and contingency costs to estimate the final project cost.
Remodeling Project Cost Estimate Template
Download Remodeling Project Cost Estimate Template
This estimate worksheet is designed for remodeling projects, and it groups costs into interior vs. exterior home spaces. Edit the example entries for labor and materials based on your specific remodel project. The Excel estimate template will generate project costs for you, with estimated subtotals listed for each area of the home and the grand total shown at the top.
New Home Construction Cost Estimate Template
Download New Home Construction Cost Estimate Template
This cost estimate template shows gross profit and margin of profit to help determine the total estimated expense for a new home construction project. The spreadsheet provides columns for construction categories, unit quantities, price per unit, base prices, markup amount, and profit. It also includes a thorough list of example tasks, materials, permits, and other items, which you can easily edit to suit your home-building project.
For more estimating templates, see our collection of free construction estimate templates , including for specific jobs, such as roofing, painting, or electrical work.
IT Project Cost Templates
It project cost estimation template.
Download IT Project Cost Estimate Template — Microsoft Excel
Assess project costs with this estimator template designed for IT projects. The template breaks down the project into phases, displaying estimated hours, labor requirements and rates, additional costs, and total cost for each phase. Choose a status from the drop-down menu to indicate whether a project element is not started or in progress, complete, or on hold. The template provides a quick, itemized overview of estimated total hours, staffing, and costs at the top.
Software Development Project Estimate Template
Download Software Development Project Estimate Template — Microsoft Excel
This software development template includes work effort and task duration in its estimate of project costs. For each phase activity, the template computes work effort in hours and days, task duration in days and weeks, the average hourly cost for required resources, and estimated total cost. It also calculates the estimated date of completion for each activity based on your data. Compare estimated hours with actual hours as you move through project phases, and get baseline, minimum, and maximum estimates for total project costs.
IT Project Cost Benefit Analysis Template
Download IT Project Cost Benefit Analysis Template
Microsoft Excel | Smartsheet
Conduct a cost benefit analysis to determine the value of an IT project over several years. This project cost analysis template includes four spreadsheet tabs. The first two tabs compile projected and current value costs and benefits; the third combines total costs and benefits for a cumulative cost benefit profile; and the fourth tab provides a cost benefit analysis of alternatives. The template also includes example cost categories and covers an eight-year timeline.
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Plan Projections
ideas to numbers .. simple financial projections
Home > Financial Projections > Cost Structure in a Business Plan
Cost Structure in a Business Plan
What is cost structure.
Financial projections need to take account of the cost structure of a business. Cost structure simply refers to the split between variable costs and fixed costs, but can have a significant impact on whether a new start up business is successful or not.
Fixed and Variable Costs
First a few definitions. A variable cost is a cost which changes in direct proportion to any production or selling activity, examples include, direct materials and labor used in manufacture, product cost, and sales commissions. On the other hand, a fixed cost is a cost which will occur whether or not a business has any production or selling activity. Fixed costs are a function of the passage of time, examples include rent, salaries, and insurance.
Low Fixed Cost Structure or High Fixed Cost Structure?
Although the cost structure of a business is to some extent fixed by the nature of the business and the type of industry in which it operates, decisions can be taken to directly influence the split between fixed and variable costs. It is important to understand that a business can have the same sales, total costs and therefore profit, but a completely different costs structure, as seen in the diagrams below.
Both businesses have the same sales, total costs, and profit, however, the first business has a high fixed cost structure compared to the low fixed cost structure of the second business.
Business Plan Cost Structure and Break Even
Consider as an example the two start up businesses shown in the table below. The financial projections of the first business show a high fixed cost structure. the business plans to start by investing heavily in production facilities, machinery and equipment to manufacture and distribute its own product. The consequence of this decision is high fixed costs but lower variable costs.
The second business proposes a lean start up. It plans to have the manufacture and distribution outsourced to a third party, its needs smaller premises and less investment in machinery and equipment and therefore has lower fixed costs but correspondingly higher variable costs, as payments need to be made to the third parties for manufacture and distribution.
Effect of Cost Structure on Break Even Calculations
In each case, the number of units sold (6,000), selling price (12,00), total costs (65,000), and profits (7,000) are identical. Using this information and the break even formula, the break even point can be calculated for each of the start up businesses.
The break even formula is:
and the break even units are given by the formula:
The results of the calculations using the formulas are summarized in the table below.
We can see that even though everything else is the same, the financial structure of the business has resulted in a completely different break even position.
For the low fixed cost structure business, only 3,083 units need to be sold at 12.00 to reach break even as shown in the diagram below.
In contrast for the high fixed cost business 5,028 units need to be sold to reach break even as indicated in the diagram below.
In order to break even, the high fixed cost business needs to sell 1,945 (63%) more units than the low fixed cost business.
The conclusion is that when producing financial projections for a start up business, in order to reduce the break even point to an acceptable level, the cost structure should aim to keep the fixed costs as low as possible.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.
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Project Management Business Plan Template
Written by Dave Lavinsky
Project Management Business Plan
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their project management companies.
If you’re unfamiliar with creating a project management business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a project management business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your project management business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a project management business or grow your existing project management company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your project management business to improve your chances of success. Your project management business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Project Management Businesses
With regards to funding, the main sources of funding for a project management business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for project management companies.
How to Write a Business Plan for a Project Management Business
If you want to start a project management business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your project management business plan.
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of project management business you are running and the status. For example, are you a startup, do you have a project management business that you would like to grow, or are you operating a chain of project management businesses?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the project management industry.
- Discuss the type of project management business you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategy. Identify the key members of your team.
- Offer an overview of your financial plan.
Company Overview
In your company overview, you will detail the type of project management business you are operating.
For example, you might specialize in one of the following types of project management businesses:
- Marketing project management : this type of project management involves overseeing projects related to marketing and advertising.
- Construction project management: this type of project management involves overseeing responsibilities related to planning and the logistics of a construction project.
- Engineering project management: this type of project management is responsible for overseeing engineering projects to ensure they’re completed appropriately.
- IT project management: this type of project management involves overseeing job duties such as establishing IT goals, overseeing the IT team’s processes and ensuring all project-related employees have the necessary resources to complete the project.
In addition to explaining the type of project management business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of clients served, the number of clients with positive outcomes, reaching X number of clients served, etc.
- Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry or market analysis, you need to provide an overview of the project management industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the project management industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your project management business plan:
- How big is the project management industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your project management business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your project management business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: small businesses, midsize companies and corporations.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of project management business you operate. Clearly, corporations would respond to different marketing promotions than small businesses, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other project management businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes in-house employees, online programs, or software. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
- What types of clients do they serve?
- What type of project management business are they?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide your own staff?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a project management business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of project management company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide consulting, scheduling, budgeting, or staffing?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your project management company. Document where your company is situated and mention how the site will impact your success. For example, is your project management business located in a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your project management marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Advertise in local papers, radio stations and/or magazines
- Attend industry events and tradeshows
- Reach out to websites
- Distribute flyers
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your project management business, including answering calls, planning and providing project services, client interaction, billing clients and/or vendors, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to book your Xth client, or when you hope to reach $X in revenue. It could also be when you expect to expand your project management business to a new city.
Management Team
To demonstrate your project management business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing project management businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a project management business or successfully running a small consulting firm.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Income Statement
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you manage 5 clients per day, and/or offer consulting services? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your project management business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a project management business:
- Cost of equipment and office supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of project management services you plan to offer.
Writing a business plan for your project management business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the project management industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful project management business.
Project Management Business Plan Template FAQs
What is the easiest way to complete my project management business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your project management business plan.
How Do You Start a Project Management Business?
Starting a project management business is easy with these 14 steps:
- Choose the Name for Your Project Management Business
- Create Your Project Management Business Plan
- Choose the Legal Structure for Your Project Management Business
- Secure Startup Funding for Your Project Management Business (If Needed)
- Secure a Location for Your Business
- Register Your Project Management Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Project Management Business
- Buy or Lease the Right Project Management Business Equipment
- Develop Your Project Management Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Project Management Business
- Open for Business
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11 Project Plan Examples: Real-Life Project Plan Samples
Fahad Usmani, PMP
December 28, 2022
The success of a project depends on the project plan. Without a project plan, project managers cannot measure the project’s progress, team members will be in the dark, and the project will be unsuccessful.
Today’s blog post will provide a few project plan examples and samples to help you develop your project plan.
However, before that, let’s understand the project plan.
A project plan is a collection of project documents and subsidiary plans that comprise the project. These plans help the project team to execute the tasks and complete the project on schedule and without exceeding the budget.
A few common sub-plans and components are as follows:
#1: Purpose of the Project: This section has the project charter and explains the project’s purpose. It can include elements of the feasibility study and cost-benefit analysis .
#2: Executive Summary of the Project: This section provides a high-level project summary; it can have a high-level overview of all subsidiary plans and explains the following:
- Work Breakdown Structure: This work breakdown structur e includes the project work broken down into work packages .
- Deployment Plan: This plan ensures that the system reaches to intended users and benefits are realized.
- Change Control Management: This ensures every change request is reviewed, processed, and integrated into the project baselines after approval.
#3: Schedule Management: Here, you establish a schedule management plan and schedule baseline. A schedule baseline helps measure the project’s progress and allows project managers to determine whether the project is on schedule.
The subsections under schedule management include:
- Milestones: Contains key project milestones and their expected achieving dates.
- Project Schedule: It shows the schedule of the project. You can base the project schedule on a Gantt chart , Milestone, CPM , or PERT .
- Dependencies: This section describes the key project management dependencies.
#4: Cost and Budget Management: A cost baseline helps measure the project’s progress in terms of cost; you can see if the project is under or over budget.
#5: Quality Management: This section helps you measure the quality of the project and ensure the project’s final product conforms to the specifications and is free of errors.
#6: Resource Management: This section covers the resource requirement, acquiring, developing, and managing these resources.
#7: Communication Management: This section collects the communication requirements of stakeholders, develops communication plans, and then engages stakeholders throughout the project life cycle.
#8: Risk Management: This section discusses risk management . Establish a risk management plan , risk definition, identify risks, develop a risk response plan, and then monitor and mitigate those risks until the project is complete.
#9: Issue Management: This section manages project issues. It includes an issue log that documents incidents occurring throughout the project lifecycle .
#10: Procurement Management: This section covers procurement activities. Purchasing equipment, hiring team members, assigning jobs to subcontractors, etc.
#11: Compliance-related Planning: This section discusses the policies businesses must comply with. For the project team to succeed, they must adhere to the regulations. In addition, the government bodies vested in the project are project stakeholders, and you must manage them closely.
Now we will see the examples of project plans and samples.
Project Plan Examples and Samples
Now, we will review eleven examples of project plans and samples.
#1. Simple Cross-Functional Project Plan
Managing complex projects can be easy by using a straightforward cross-functional project schedule. It improves the success rate and decreases the likelihood of expensive execution faults. You can manage the project using a single integrated and specialized functional plan at the highest level.
#2. Product Marketing Sample: Plan the Next Launch
Before introducing a product, businesses conduct market research to test the waters to decide on market tactics.
The strategy focuses on persuading the target audience to try the product. Ensure you have a plan before moving ahead to sell a product.
Here is a sample of a marketing strategy to help plan a new launch:
#3. Content Calendar Plan Sample: Hit Publishing Deadlines
Product managers constantly seek new ideas to give them a competitive advantage. They promote products across many platforms, including social media. Timing is the key to attracting the right audience on social media.
To plan posts successfully, product managers rely on content calendar templates to plan content, keep up with trends, and be ready for any changes.
Product managers can better plan and organize upcoming content with the help of a content calendar. They can track the content’s progression, identify gaps, and evaluate how well they are meeting the goals.
A content calendar can include upcoming articles, status updates, planned promotions and partnerships, and planned content revisions.
You can use Google Sheets, Excel, and other project management tools to organize and publish content.
You can use the following content calendar sample:
#4. Marketing Campaign Sample Template: Map out The Plan
A marketing campaign can drastically affect the digital marketing approach. Consider it a digital road map to the desired outcome, such as increased sales, brand recognition, or lead generation. You can use it to identify precise marketing goals, forecast future trends, get funding, and improve procedures.
Below is an example of marketing campaign planning:
#5. Agency Management Sample: Nail the Next Collaboration
When working with agencies, you must consider deliverables, finances, proposal writing, and planning, among other things. You can avoid following up on lengthy email exchanges to keep up with the latest updates and ideas if you use agency management planning.
It offers a comprehensive summary of everything the agency is working on, facilitating easy collaboration on projects and contact with internal and external stakeholders.
You can synchronize time and establish priorities. To assist the agency in comprehending what you expect of them, develop priority levels and dates for the required completed outputs.
It keeps everyone updated on the agency’s activities and problems by giving regular status reports, which you can use to share progress.
It streamlines approvals. Tracking and moving agency work through approval phases makes it possible to launch campaigns quickly and ensure nothing becomes dispatched without approval.
#6. User Research Template: Organize Uxr Projects
Getting consumers’ attention is valuable. Before researching users, it is imperative to have clear goals, expectations, and questions available to discuss with anyone who inquires.
A user research plan conveys crucial user details. These documents, with protocol and research roadmap, ensure everyone is on the same page and is aware of their responsibilities.
#7. Sprint Planning Template: Manage Agile Teams
Sprint planning helps agile teams prioritize their workload and identify which members can best handle particular tasks. It is difficult to assign work at the right time without a plan.
#8. Board Meeting Agenda Template: Take Meeting Minutes
The board of directors consists of influential stakeholders who also have a lot of other responsibilities. They can make better use of their time thanks to the meeting agenda.
The structure of a board meeting agenda can include the following:
- Heading: This section should have the meeting’s time, place, and date.
- Call To Order.
- Changes to Agenda.
- Approval of Minutes.
- Reports.
#9. Work Requests Template: Simplify the Intake Process
Work requests can come in at any time and can distract team members. Priorities can misplace if you don’t have a mechanism to handle these requests, which can distract team members. To avoid this, you can use work request templates to manage work requests and boost the team’s productivity.
#10. Sales Plan Sample Template: Set Strong Goals
Sales managers depend on a sales plan. This plan has the sales goals and establishes the plans and strategies. It helps estimate the budget, identify the sale market prospects, plan staff requirements, and obtain a timeline for achieving the goal.
Developing a sales plan costs effort, time, and money. However, you can avoid these expenses by using templates for efficiency and organization and investing in other areas to make the sales plan successful.
Below is an example of a sales plan:
#11. New Employee Onboarding: Standardize Onboarding
New employee onboarding involves getting a new employee and helping with their onboarding.
The following questions can help onboard new employees:
- When will the process begin?
- How long would it last?
- What are the cultures and work environments the new employees need to know?
- What are the goals for new employees?
The success of a project can be organized and shaped with the use of project planning assistance.
You can construct a strategy for your next effort with the project plan examples and samples provided in this post.
I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.
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Examples of Project Cost Assumptions
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- Project Management
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How Is a Project Budget Calculated?
How to get rid of unneeded cells in excel, how to estimate cash flow of a project.
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Accurate and precise cost assumptions are critical to developing short-term and long-term budgets for planned projects. Budget planning assumptions help businesses create contract proposals that require an approximate total project cost. If the cost assumptions of a business' project are not accurate, the business risks running over budget and spending money it does not have.
Salary Costs
Managers can typically assume the cost for salaries and wages for project budgeting purposes. For example, a project may require a marketing manager to create marketing materials and execute marketing strategy. If the project is expected to last two months, the project cost assumption for the marketing manager is approximately two months of salary. Similarly, the cost assumption for hourly workers is attained by estimating the total number of work hours for the project and multiplying that number by the number of workers and their hourly pay.
Materials Costs
The raw materials needed for a project are part of the project's total direct cost. Managers create material budget assumptions documents based on past experience with a project or from other estimation methods. For instance, an aerospace company might create a project cost assumption for the aluminum needed to build a rocket based on a scale model. Or, if the company has built the rocket before, it will reference past budgets for material costs. Use reliable data sources to best forecast your upcoming materials costs for projects, says Project Manager .
Equipment Costs
The assumed project cost of equipment usually includes the cost of new equipment needed for the project and the expenses incurred from equipment maintenance. For example, a construction company may know that it needs the use of a crane to complete a building. The construction company would then calculate the cost of the crane over the length of the project, including any insurance, and write that cost in the equipment section of the projected budget.
Indirect Costs
Indirect costs are also part of a project's budget assumptions worksheet. Indirect costs are not directly related to the finished project, but must still be paid for in the project's budget, according to Net MBA . Typical indirect costs include administrative salaries, office rent and office supplies. When assuming the cost for indirect expenses for a project, managers look to the business' past indirect expenditures and create a unit of time to assign for indirect costs. For instance, a business' indirect expenses may be about $100 per day. If the business spends 10 days on a project, its assumed project cost for indirect expenses is $1,000.
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Home / Project Management / Project Plan Example – Sample Real-Life Project Plan
Project Plan Example – Sample Real-Life Project Plan
Are you planning to create a project plan? What does a good project plan look like? How could I create one? Where should I start to create a plan for your project? For a successful project, a great project plan is essential.
In this article, we will go through the key steps to write a project plan successfully. Project plans vary in sizes, elements, format, and components. So, there is no single way of creating a project plan. As a matter of fact, a good project plan contains the project goals it is meant to address. You may find many project plan templates that vary from extremely complex to extremely simple across the internet. But how do you choose the right one?
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- You can also check out our self-paced PMP® Certification Training .
Well, before we start let’s give you a link where you can download a FREE project management plan example along with four other Free Project Management Templates .
Finding the right project plan
If you select any project plan template, you may find yourself spending precious time filling in lots of details. Your project may not have these details or in most cases, it won’t need them. At the same time, if you select a more simplified project plan template, you may find yourself stuck with a very limited version of the plan that does not include important details.
So what should you do? We tend to use a more practical approach, instead of just handing you a ready-made project plan example template. We will show you the right project plan example for your project. Accordingly, our offering will include steps you should take to create a suitable plan for your project regardless of its size and components.
How Should You Start Creating a Project Plan?
So let’s start with the obvious questions, where should you start and how should you start. Now many project managers deal with project planning as a solo act. Thus, they usually tend to neglect team collaboration and depend on their own intellectual skills to perform the activities all by themselves. While this may seem an easy approach to creating a solid project plan example, it is an approach full of flaws. As a start, consider the fact that teamwork and collaboration bring more value than individual efforts no matter how brilliant the individual is . Additionally, the combined backgrounds and experiences of your project team will cover many project considerations.
1. Breakdown the work
The next step is to sit with your team to define the project work at a high level and then break it down into detailed work packages . Meanwhile, the team should also work on defining the tasks to carry out in order to complete the defined work packages. These tasks should carefully detail every activity the project team will execute. This way, the team leaves no chance of missing any aspect of the project and it also helps the team plan and assign proper resources. As a result, this step is considered one of the most important steps in project planning. Also, it helps in drawing the line for what should the project team consider as a part of the project scope of work and what is considered out of scope.
2. Define quality standards
3. Assign Resources to Tasks
4. Define the Relationship of Activities
The next step is to understand the relationship between different tasks and activities. This step is the heart of project planning since it defines opportunities for project schedule compression. In addition to the mentioned, it gives the project team the opportunity to identify schedule risks and potential conflicts over resources. Defining the relationship of activities is also known as activity sequencing. So how do you do it? It mainly works by defining what are the mandatory relations between different activities. Also, you should define the logical relations between different activities. The project team can identify mandatory relations by reviewing any relationship defined by contractual agreement or obligation. On the other hand, the team can identify logical relations through what works best.
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Activity relations (SS, FS, FF, etc.)
Now let’s go through each type of relation the project team can identify and how it works. There are four types of relationships between different activities:
- The first type of activities’ relationship is Start to Start (SS) . This type of relationship is used when one activity cannot start unless the other activity starts.
- The second type of activities’ relationship is Finish to Start (FS) . The project team uses this type of relationship when one activity can not start unless the other activity finishes.
- The third type of activities’ relationship is Finish to Finish (FF) . The project team uses this type of relationship when one activity can not finish unless the other activity finishes.
- The fourth type of activities’ relationship is Start to Finish (SF) . The project team uses this type of relationship when one activity can not finish unless the other activity starts.
5. Estimate Resources and Duration of Each Task
The next step in formulating a project plan example is to set an estimate resource and duration for each task of the project. Each resource should define the duration and any resources (tools, equipment, etc) needed to complete the task. This way we can set duration estimation for each activity in a realistic way and at the same time confirm the required resources for each activity. By completing this step, formulating a project plan is almost near completion.
On the other hand, the project team can use multiple techniques to set activity resources and duration estimation. These techniques may include parametric estimation which uses a statistical relationship between historical data and other variables. Also, the team can use more simplified estimation techniques like Analogous estimation, Bottom-up estimating, or three-point estimation techniques. The team can use the later technique by calculating the average or the weighted average of optimistic, pessimistic, and most likely estimates.
6. Estimate Each Task Cost
This step is similar to estimating resources and duration for each task of the project. Based on task resources, required talents, and duration, the team should decide the cost needed to complete the task. As another step for creating a project plan example, this step provides a realistic cost estimate for each activity. Same as estimating resources and duration, the project team can use multiple techniques to set task cost estimation. These techniques include parametric estimation where the team uses a statistical relationship between historical data and other variables to identify cost. Also, the team can use more simplified techniques like Analogous estimation, Bottom-up estimating, and three-point estimation techniques. Just like estimating resources and duration, the team can use the latter technique by calculating the average or the weighted average of optimistic, pessimistic, and most likely estimates.
7. Generate Project Plan
After completing each task resource and duration estimation, in addition to completing cost estimates for each task, now you can generate the final version of the project plan example . You should review the different aspects of the project plan to inspect any potential conflict between them. There may be estimated costs for an activity which don’t match the resource estimate. In such a case, you need to review your project plan example and find a way to clear that variance. We highly recommend that you review the project plan example we provided as an attachment for your reference. The final reviewed project plan example is sent for approval and final authorization for execution.
Click to download the sample project plan example
8. Finalize and Approve by Sponsor
First, the project team carefully reviews the final project plan example and rectifies any variances between different elements. Then, the project manager hands over the final version of the project plan to the project sponsor for review, recommendations, and final approval. The project sponsor revises the project plan’s final version and investigates it to ensure it is realistic enough. Also, the sponsor reviews the plans constraints, assumptions, and project risks. As a result, the project plan might be returned to the project team for revision if the project sponsor sees it as unrealistic. On the other hand, if the project sponsor finds the plan realistic, integrated and conflict-free, he/she will approve it directly. Thus, the project team can have an approved version of the project plan example when the project sponsor authorizes the team to start executing project work.
Project Plan Example of a Project
Now let’s go through a sample project plan example that we have attached above for you as a reference to use for your future project plan. This project plan example offers major sections of the project plan that we described in this article. Accordingly, we will briefly step through sections of the project plan example to enrich your understanding of the sections. The main section of the sample project plan example:
Sample project plan example – Section 1: Executive Summary of Project Charter
The first section of the sample project plan example covers the Executive Summary of the Project Charter including project constraints and assumptions.
Sample project plan example – Section 2: Scope management
This section includes what you have detailed in the first step in this article “Breakdown the work “. This includes three subsections:
- Work breakdown structure: Includes defined work package and sub-work packages and their associated breakdown sub levels
- Deployment plan: Let’s say that the project involves deploying an application to state health partners. This section would discuss the approach for rolling out the application to the end-users, including conducting environmental assessments, developing memorandums of understanding, hardware/software installation, and data conversion.
- Change management plan: Let’s say that a development server for your project is administered by another organization that is responsible for installing machine upgrades and there are scheduled outages that will impact your project schedule. Changes to the project will need to be made to deal with the potential impact of the scheduled outage.
Sample project plan example – Section 3: Schedule management
This section is about whether you stay on track with the planned schedule. It includes the output of sections 4 and 5 of this article. Let’s give an example of a schedule management approach: Establish a baseline within the first two weeks of the project and monitor progress against the baseline on a weekly basis. The project manager will be responsible for ensuring the project schedule is updated with the latest information and never more than three business days out of date. For variances on executive milestones greater than 10%, the project may choose to use guidance specified by CPIC. See the CDC UP Project Schedule document for more guidance on project scheduling and for Project Schedule templates.
The subsections of this section are:
- Milestones: includes milestones and their Estimated Completion Timeframes
- Project schedule: the following diagram provides a sample project schedule
- Dependencies: describes the output of section 4 of this article “Activity relations (SS, FS, FF, etc.)”
Sample project plan example – Section 4: Cost/budget management
This section of the sample project plan example describes the project’s cost management plan or provides a reference to where it is stored. This section should contain step 6, “Estimate each task’s costs outputs”.
Sample project plan example – Section 5: Quality management
This section of the sample project plan example describes the project’s quality management covered in step number two in this article.
Example: An information system that controls the level of consistency for screen layouts would normally contain a full review for all available screens. Thus making sure that these screens match the originally agreed set of quality standards. In many cases, quality measures may include a condition of no defects (bugs) for certain requirements the company deems critical. While in other cases, quality measures may require consistent screen layouts and/or correctly calculated variables. Generally, the project managers can ensure quality through performing inspections and audits as well as using formal testing. Then, the project management team should document those defects in a tracking system to ensure fixing defects, retest them and eventually close them. In some projects, the project manager may use an artifact like a traceability matrix as a tool for determining whether critical requirements are met or not.
Sample project plan example – Section 6: Resource management
This section contains the description of the resource part discussed in step 5 in this article.
Sample project plan example – Section 7: Communication management
It contains communication planning for a different types of communication between different stakeholders and the project team. sample for communication matrix below:
Sample project plan example – Section 8: Risk management
This section contains all risks identified in any element of the project , it mainly contains the Risk Log. The project managers normally maintain a risk log away from the project management plan in a separate document. The project manager may merge different logs into a single document that contains all different logs.
Sample project plan example – Section 9: Issue management
This section contains all issues surfaced or detected in any project element, it mainly contains the issue log. The issue log is normally maintained by project managers in a separate document away from the project management plan. The project team may also merge the risk log with the issue log in addition to other logs like assumptions and constraints log into a single document.
Sample project plan example – Section 10: Procurement management
Example: Normally this section would include information related to physical and human resources that can be procured. Thus ensuring that the procurement of hardware including computers, development servers, and test servers are planned and managed properly. Also, it describes how to leverage project team staff members from an external vendor. Additionally, it can go into more explicit details to include project staff acquisition strategies.
Sample project plan example – Section 11: Compliance-related planning
In this section, you need to insert a list of compliance-related processes that the project team must adhere to in order to meet company compliance policies. Moreover, it may include a description of governance bodies that oversee the project work or review the product deliverable. It also states occasions of governance-related reviews and audits describing the audit standards and their acceptance criteria. Additionally, it may also include a description of who has the right to perform audits and how they will be performed.
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Disclaimer:
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- ITIL® is a [registered] trade mark of AXELOS Limited, used under permission of AXELOS Limited. All rights reserved.
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How to Make a Cost Management Plan
You know how it goes—you’re a few months out from a deadline, and your team isn’t anywhere close to finishing the project. You’re quickly running out of budget and time, and you’re starting to stress. Should you tell the stakeholders, or wait a little bit longer?
Well, you’re not alone at least, as this situation happens to more than 45 percent of all large-scale IT projects. For many, this comes both as a detriment to a project’s timeline and to the final product, with 56 percent of projects delivering less value than anticipated. Yikes. How can you stop this from happening? A cost management plan can help.
What Is a Cost Management Plan?
A cost management plan is a method of strategizing the planning and execution of a project’s budget. Of course, this is done in order to complete your project on time and on budget. However, without a proper cost management plan in place, both of those things will falter—costing you and your organization immensely.
What’s more, project success hinges on cost management, as cost is the primary determining factor for the success or failure of the venture overall.
Because a cost management plan is so important, you need to use project management software in order to track your costs. ProjectManager is a cloud-based work and project software that can track your project costs in real time. Build your plan on our award-winning Gantt chart, then track it with a live dashboard that requires no setup. You’ll always know if you’re meeting the cost management plan with ProjectManager, so get started today for free!
How to Create a Cost Management Plan
Cost management is sometimes also known by its more specific sub-task names, like spend management, cost transparency and cost accounting. It is typically made up of four steps: resource planning, cost estimation, budgeting and cost control. It’s strongly recommended that you use project planning software to assist you in the process of creating a cost management plan, as there will be many tasks, costs and resources to track.
1. Resource Planning
Starting with the resource plan , project managers will typically use a work breakdown structure to show the project and its deliverables in a hierarchy from most important to least. This piece helps project managers to understand where the bulk of the costs will funnel towards, and which components of the project will require the least expenditure.
2. Cost Estimation
The second stage, cost estimation , is a process that’s iterative—meaning that it’s designed to change as the project changes. This stage uses many different estimation techniques that are determined by conceptual goals, historical knowledge, expert judgement, determinative techniques or a component-by-component basis.
Related: Free Cost Estimation Template
Historically-speaking, determinative techniques have been shown to be the most accurate. However, this process only makes sense to use once every last project detail has been mapped out—including the scope and deliverables. For projects that are lacking fine print, less accurate cost estimation techniques will still be valuable during this stage.
3. Budgeting
Now, the cost estimation phase might have felt like you mapped out your budget already, but really you just mapped out the blueprints for your budget. Your project budget will be a little more precise by this measure, and will enable the project to truly succeed.
Budgets are formed and approved after the estimation phase, and are typically released for the project in a series of phases depending on the project’s progress. This will help the project reach its milestones within each budgetary phase, rather than trying to match an overall project budget.
4. Cost Control
Cost control is simple—you’ll measure your project’s dollar value performance against your total cost and timeline. This will help provide a benchmark throughout the project process.
First, your requirements are established well in advance, during the project planning phase. Then, they are used as a method to challenge reasons for changes in cost. This will help to course-correct should a cost increase out of budgetary range and keep the project from ballooning out of control.
Ultimately, your cost management plan will help you to both plan for the project cost, and manage your project cost throughout the course of the project’s life cycle. As your project is underway, your project expenses will be thoroughly documented throughout the project so that your project can stay within budget.
Cost Management Plan Terms and Formulas, Defined
In mapping out your cost management plan, you’ll need to do a lot of different calculations, practice many formulas and triple check your math when you’re done. But that being said, these actions go by many specific names. Let’s define them.
- Work Breakdown Structure: Similar in style to the waterfall method or a simple hierarchical flow chart, this is a product-oriented layout of work, tasks and activities to be done by the team members.
- Cost Baseline: This is created by estimating your costs against the general time period that your project will take place. Your cost baseline is ultimately what you’ll use to compare your performance, usually illustrated on an S-curve.
- Control Threshold: Just as you set your baseline, your cost threshold is the highest or lowest spend your project is allowed to go. Anything above or below that is deemed unacceptable in terms of cost management .
- Level of Precision: This unit of measurement will show how steep your cost estimates will be rounded down or up. Your level of precision will additionally be defined by the scope and total size of your project.
- Earned Value Measurement: The earned value equation helps project managers to better measure the amount of work that has already been performed on said project as accurately as possible.
- Three-Point Estimation: Using this formula, you’ll get three figures. The first would be your best guess (BG) on the amount of work an activity would take if it was performed 100 times. The second would be your pessimistic (P) estimate , which is how long the project would take and how much it would cost if all the negative risks occurred. And your third is your optimistic (O) estimate if all of the positive risks occurred.
- Bottom-Up Estimation: This formula involves using the smaller estimates of your project, and then aggregating those into a sum total to determine your overall project cost estimate.
- Analogous Estimation: This estimate is calculated by comparing all past projects cost estimates and measuring them against your current project’s time and cost. This is typically done when there are few project details available.
- Parametric Estimation: This estimate is calculated by tying a cost to each task and mapping that cost against the projects timeline. However many tasks there are will help you find your total cost estimate. This can be done in ProjectManager by using our online Gantt chart . Here, you can assign a cost to each task, and as the project is completed, the total cost is automatically calculated and compared to the budget.
How to Track Results for Your Cost Management Plan
Half of your cost management plan is, well, managing your cost throughout the project lifecycle.
When monitoring your project’s cost, use your benchmarks, as they’ll be the key to decoding whether your project is on track, behind or over budget. Because of this, you’ll want to be able to see your planned progress against your realized progress to ensure you’re still on track. Many people use their project management workflow (whether that’s via the waterfall methodology , a Gantt chart or a kanban tool) to gauge this metric.
3 Things to Avoid When Making a Cost Management Plan
Knowing what not to do is as important as knowing what not to do when making a cost management plan. A cost management plan is complicated and mistakes can be made. The more aware you are of what those missteps are, the less likely you’ll be of taking them. Here are a few to be on the lookout for.
- Poor Stakeholder Communication: Reports are the main vehicle by which project managers communicate vital cost statistics to the project stakeholders. Stakeholders have a vested interest in the success of the project and therefore are very interested in how it’s progressing.
- Not Using a Work Breakdown Structure: Not mapping every step necessary to reach your project’s final deliverable is going to impact your budget, and in so doing, your cost management plan.
- Using Only Spreadsheets: Spreadsheets are powerful and do so much well. But they’re not what you want to manage a cost management plan. It’s easy to make mistakes inputting data, they can quickly become overly complex, and there’s limited reporting and visual capabilities.
Free Templates to Help With Cost Management Planning
It’s more productive to manage your cost management plan with project management software, but if you’re not ready to invest in digital tools, there are templates that can act as a workaround. ProjectManager has dozens of free templates, many of which are great for cost management. We selected three of the best cost management planning-related free templates for you to download below.
Project Budget Template
A cost management plan begins with a project budget that forecasts all the costs associated with your project and helps you monitor those costs as you execute the project. Our free project budget template for Excel walks you through the budget process, from capturing labor and materials costs to other line items, such as travel, equipment and fixed items. There’s even a place to track your planned versus actual budget costs.
Project Dashboard Template
Keeping track of your cost management plan as you implement is how you keep to that plan. While real-time software is more accurate and involves less work, you can input data into our free project dashboard template for Excel and see how your costs are with easy-to-read graphs and charts. That way you can catch when costs exceed your planned costs and adjust accordingly to stay within your budget.
Action Plan Template
In order to execute your cost management plan, you’re going to need to have a set of tasks assigned to team members. Our free action plan template for Excel outlines those steps to turn your strategy into reality. You’ll find space to list your tasks and in what phase of the project you’ll execute them, their priority, who’s assigned, duration, start and due dates, resources necessary and even the status of the work being done.
How ProjectManager Helps with Cost Management Plans
Whether your next project is large or small, you’ll need to make sure your cost estimation is as accurate as possible, and easy to manage long-term.
With ProjectManager , you’ll have the power to customize your project reporting to get only the data you need, plus you’ll be able to see actual project progress on team members and their tasks.
And whether you’re using determinative techniques, historical data, analogous estimation or three-point estimation to gauge your project cost estimates, you’ll have a tool that can plug in your project data and calculate your estimates for you. Additionally, with our real-time dashboards and project reports , you’ll be able to get a visual on the estimated benchmarks of your project, so you can see if you’re ahead or behind schedule with the click of a button.
Estimating your costs and getting an accurate reading before project kickoff is one of the most important components to ensure project success. That’s why ProjectManager is dedicated to giving teams the software they need to plan cost estimates, employ a management plan and collaborate effectively no matter where they’re located. Sign up for a free 30-day trial of ProjectManager today.
Related Posts
- The Quality Management Plan in Project Management
- How to Calculate Cost Variance for a Project (Formula Included)
- How to Make a Scope Management Plan
- Project Time Tracking: Management Tips & Tools
- Project Plan Template
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IT Project Managers
IT Project Management Insights
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The first project budget example is for a small construction project. You can use the following template for most of the projects. But you need to keep to one critical concept:
You need to use Work Breakdown Structure elements here.
It means I used a specific technique to decompose the work into the tasks. Using the concepts of WBS and bottom-up estimates is mandatory if you want to create an accurate budget.
Project Budget Example in MS Project or Other Tools
Excel will do the trick for most small and medium projects. Moreover, you can use one sheet for one deliverable to make the budget more usable.
Nevertheless, let me give you an example of the same project budget but in a project management application.
First of all, you can have a running list of all project resources separately. Then, you can create the resources availability calendar, specify regular and overtime rates, and contact details.
The best thing about it:
Project schedule and budget will automatically take this information into account based on when you assign a task to a specific resource.
Just a side note: I never call real people a “ resource ” day to day. I would use a name or a title. But, when speaking about an open position on your project, it’s okay to call it a resource.
It all means that you can safely move the tasks around without fear of forgetting some public holiday or extra cost of the overtime.
Likewise, project management software allows you to allocate budget granularly to specific tasks and resources.
Software Project Budget Example
Let me show you a software project budget example. First, it’s essential to understand that each industry and company has a different way of estimating and controlling costs .
In software development projects, a PM usually tracks the cost of the team. This is because that’s the biggest part of running costs.
As you see, here, we can plan and track the monthly budget in a simple spreadsheet.
Most of the companies use a variation of a Times and Materials contract. We bill the project owner per hour, day, or week of actual work by a resource. Sometimes clients agree to “pre-pay” for a month in advance.
However, software projects always come hand in hand with some hardware.
IT Project Budget Example
In addition to the tracking efforts, you need to budget for infrastructure to host your software.
But there’s a catch:
Nowadays, there are so many payment plans that showing one example is not representative.
Nevertheless, companies like Amazon and Microsoft provide calculators for infrastructure costs:
You can use them as a starting point, but you need to make some usage predictions to ensure you don’t overrun the limits of your payment plan.
These project management examples are excellent, but you can’t re-create them merely by looking at pictures. There are lots of considerations behind each line here.
Let me share my tips on creating an accurate project budget.
What is a Project Budget?
Before we dive deep into the practical aspects of creating a project budget, you need to understand what it is:
A project budget is a tool that calculates the total funds authorized to execute the project. It contains planned expenses for all project activities, including wages, materials, fees, risk reserves, etc. The project budget is created based on the Activities List.
So, it’s not just a number, not the sum of all planned expenses. Instead, a project budget is a tool that helps you prove all the required resources to execute the work you identified.
How to Create a Project Budget Step by Step
Please note that budgeting a project is not the first or even second step in the project management process. So, the instructions below assume that you did your due diligence in all prior processes.
Select a Project Budget Template
As you saw from the examples, you can use excel or dedicated project management software to create a project budget.
The primary consideration is to select expenses categories relevant to your industry and niche.
If you aren’t given a template, here’s a shortlist of possible expenses that you may need to consider:
- Team-building activities.
- Employee incentives.
- Outsourced labor.
- Cost of materials and equipment.
- Travel expenses.
- Risk reserves .
- Team members’ training.
- Consulting fees.
- Contracted services.
- Recruitment fees.
- Office rent.
- Computer lease.
- Repairs and maintenance.
- Office supplies.
- General insurance.
- Software licenses.
- Marketing materials.
- Infrastructure maintenance.
If you want to get templates from the example above, I can share them. It’s a great starting point.
Break Down the Project into Tasks
To illustrate what I mentioned above.
Here’s what it takes to break down the project into tasks:
- Get approval on the project charter .
- Create a requirements traceability matrix .
- Create a project scope statement .
- Create a work breakdown structure (WBS) .
The WBS is the tool that helps you break down the whole project scope and identify all of it. It consists of big pieces of tangible results called ‘deliverables’ and smaller pieces called ‘work packages’. These all have a unique identifier that clearly states their position in the hierarchy called the ‘WBS index.’
Then can you take each work package from the WBS and break it down into tasks.
For tiny and small projects, it might be overkill. So, you can simply list out all the required tasks. In any case, your goal is to identify 100% of the project scope (the work you need to perform).
Identify and Allocate Required Resources
Once we know the scope of our project, we can identify what resources we need in terms of people, materials, and tools.
For each task, decide:
- What kind of expertise do you need?
- How much experience should an expert have?
- What hard and soft skills do you need?
Next, group similar tasks together and create a “role” to perform these tasks. Then, assess how many people will be needed to carry out this work. Additionally, consider whether you need a team leader.
You will end up with a list of roles or positions on your project. For example, ten carpenters, three bricklayers, and one designer or three senior back-end software engineers.
Just as with human resources, you need to identify the exact date when you need to get materials, tools, and equipment.
Give your list of tasks (and the required materials and tools for each of them) to the procurement team so that they can plan accordingly. In the long run, you need to get a commitment from them to fulfill your project’s needs. Their plan will feed into your project schedule and budget.
Estimate the Cost of Each Task
If project owners pay for the whole team throughout the project’s duration, you don’t need to estimate the per hour cost of a task. Just include a lump sum of the team’s rates into the budget. You may need to adjust it based on when people actually join and leave the team, just as I showed in the software development project budget example.
If you bill the project owners on an hourly basis or a contractor does the bulk of the work, you need to estimate the cost of each task. In most cases, it is the duration multiplied by the hourly rate of those who did the work. That’s what we did in the construction project example able.
I’ll explain where to get the rates and costs later in this article.
In addition to that, you need to estimate the costs of materials, equipment, and other required services. In some cases, it’s critical to identify the dependencies and duration of tasks before you estimate the costs. For example, prices of materials and equipment may fluctuate. Likewise, it might be harder and more costly to hire people in specific periods of the year.
These are general considerations. In practice, cost management depends heavily on the industry, niche, and specific company you work in. If you are new to this environment, you need to learn the details of cost management from your peers, accountants, or leadership.
The next step is to think about other related expenses, like costs of hiring people, traveling, training, team building, etc. To make your life easier later on, link to the associated deliverables as much as possible. Don’t let the expenses float around. It will be hard to prove that you needed them to achieve the project objectives.
Add Risk Reserves
Keep in mind, that risk management is not free of charge. Moreover, it’s a part of your project. In all its aspects, it takes time and money to avoid or mitigate risks.
All your risk management activities should transform into specific tasks related to a deliverable. Or it should be a risk resource assigned to a task, work package, or a deliverable again.
If you are not familiar with proper risk management, I strongly recommend watching the video below. Otherwise, your project is doomed to failure.
Create a Project Baseline
After several iterations of risk management activities, you will have a realistic budget. Then, if it gets the thumbs up from project owners , you get your cost baselines.
A baseline is just a final and approved version of your budget. It is fixed in stone and used as a reference point for your project’s progress. If you deviate from the baseline too much, that’s a problem you need to address.
Without establishing the baselines, you won’t be able to prove that you are heading in the right direction. And you’ll deprive yourself of the opportunity to improve your project management approach.
In modern project management software, you can set a baseline with one click. Check the manual to find this feature.
How do You Create an Accurate Project Budget
Get the practical project management book.
There are lots of prior processes that you need to implement correctly. Moreover, the project budget depends on risk management, accurate schedule, and engagement of stakeholders.
How do you make it work together as a whole? You can learn the practical project management framework that I use from my book:
A book that covers all aspects of project management
Most project managers don’t have formal education. So, they have to google articles and videos to run a project. I know how stressful it is.
This book teaches all aspects of project management that work in real-world companies.
You can continue wasting time collecting bits and pieces of the project management wisdom, or you can get the book that comes from practical experience.
Golden Rule of Cost Estimates
First, remember the ground rule: People who will perform the work should participate in the estimation process. Additionally, if you have a procurement manager, you need to involve them. Together, they should estimate the duration, efforts, materials required, and any other additional costs. Moreover, they may give you insights on where to get the related prices.
If you don’t have a project management team yet, you need to find SMEs who have expertise in similar projects. And if your company doesn’t have such experts, I recommend you postpone the development of the scope and budget until you acquire these people.
Then, of course, you should let your clients know, because this represents a severe feasibility risk. You, as the project manager, can’t provide specific estimates yourself .
Where do I get Labor Rates?
Your company should have a list of possible prices for labor you use in-house on a regular basis. In addition to that, vendors have price lists.
So, the first step is always to ask your leadership about the rates. Otherwise, you need to research the market, including freelancers, to find out average rates for the required roles. You need to make an assumption here and include the “planned rate” into your budget.
Keep in mind that the rates you use here will directly impact the hiring process. For example, it may take more time to fill the required position if you put them below the market average.
A project manager often doesn’t have access to information about in-house employees’ wages. In this case, the cost of their labor boils down to reporting the working hours they spent on your project.
Where do I get Price Lists for Materials and Equipment?
A company should have a list of trusted vendors. Your first point of contact is a procurement manager. If you can’t find such a list, you need to create one.
There’s a potential risk when it comes to the cost of materials and equipment you need to be aware of. Your estimates might not be accurate by the time you come to purchase them in, say, six months’ time. So you should be ready for price fluctuations. It might be a significant hit if you need a large amount of materials.
Moreover, serious procurement requires serious legal support. It’s one thing to hire a freelancer on Upwork. You can do that without any help. However, it’s a different story when you need materials from another country.
Why is Collect Historical Data From Your Colleagues Critical?
Your company may not have a formal archive. But other project managers have tons of information. So don’t be afraid to ask, especially if they’ve worked on similar projects.
You may identify expenses that you overlooked. In addition, these project managers may share their experience, provide you with lessons learned, and give helpful tips.
For example:
- Materials need storage. You need to rent space.
- There are transportation expenses for delivering them on time to the site.
- Machinery and tools break. They might need replacing.
- Most applications require licenses. These can be expensive for commercial use with big teams.
Remember, every project has a unique set of additional expenses.
How to Budget Variable Costs
Costs like electricity and phone bills, file storage space on a server, etc. can vary over time. You need to budget accordingly. Again, historical data and other project managers will give you an idea of what you can expect.
Reserves for Unknown Risks
When you sum up costs for all activities, you’ll get a budget for work packages.
When you sum up costs for all work packages, you’ll get a budget for a parent deliverable.
When you sum up costs for all deliverables, you’ll get a project estimate.
When you sum up the project estimate and the total number of risk reserves, you’ll get a cost baseline. Then, you need to get approval from the project owners.
When you sum up project baseline and management reserves, you’ll finally get the project budget.
The management reserve is allocated for unexpected risks and events. Usually, it’s an additional 5%, 10%, or 15% of the cost baseline. But, keep in mind that you don’t have direct access to these reserves. You’ll need approval from clients or the steering committee to use them.
The problem is that this approach is purely theoretical. Companies rarely break down a project budget in this way. So, the takeaway here is the buffer that you need to have in your budget. Even if you performed all risk management activities, you need reserves for entirely unexpected things. And they will undoubtedly happen.
Funding Requirements
And that’s not all either. You need to provide a funding schedule. Don’t expect that you’ll get every penny on day one. Most likely, the project will be funded in installments.
You need to ensure that you have enough cash to keep the project running every day. You should pay close attention to when you need to purchase materials or pay vendors. Don’t put your project on hold just because you’re waiting for the next installment.
If you have cash flow constraints, you need to consider these as part of the whole project plan.
Harsh Truths
Sometimes, clients and your leadership will ask you to provide a project budget when you don’t have a project team. Likewise, they may not give you enough time to prepare with due diligence.
You just need to provide them with a number (total project budget). So, if you are not able to convince stakeholders to do it the right way, you need to safeguard yourself and the project team. Provide higher-level and rough estimates based on the worst-case scenario, especially for deliverables that you have little certainty about.
Yes, sometimes that means that you need to double or triple estimates. To be ethical and professional, you should be transparent about the accuracy of these estimates and offer to provide more specific estimates later in order to come up with a more accurate budget.
Project owners like to constrain the budget. And they believe that it’s feasible to achieve project objectives with this budget. But don’t take it for granted. Sometimes, you need to prove that the budget, stated in the project charter right at the beginning of the project, is insufficient. Again, the more you involve stakeholders in the planning process, the easier it will be to prove your point.
Recommend Further Reading:
- Practical Project Management Book
- Practical Guide to Useful Project Management Plan
- Project Charter Example and a Full Guide (+Template)
About Dmytro Nizhebetskyi
Most project managers don't have formal education. As a result, they learn through theory books and googling. I teach people practical project management that works in the real world. So that you can successfully finish your projects on time and within budget, and in the long run, you'll become a world-class project manager. Learn More Here.
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Project Cost Management: Steps, Basics and Benefits
Organizations aim for their projects to succeed and to meet client expectations, as well as their internal objectives. But what is the reality on the ground? In a PMI report , 14% of the surveyed IT projects were deemed as failures. Only 57% of the projects were finished within their initial budgets, with the others exceeding the target they had set for themselves.
This is not good news for enterprises as cost overruns not only impact their margins, but also hinder the ability to execute future projects. Understanding what project cost management is and how to be effective at it can be beneficial for organizations to stay on track.
In this article, we look at what project cost management is, its benefits and the steps involved in its implementation.
What is Project Cost Management?
Project cost management is the process of estimating, budgeting and controlling costs throughout the project life cycle, with the objective of keeping expenditures within the approved budget.
For a project to be considered a success, it’s necessary that
- it delivers on the requirements and scope
- its execution quality is of a high standard
- it’s completed within schedule and
- it’s completed within budget.
Hence, project cost management is one of the key pillars of project management and is relevant regardless of the domain, be it manufacturing, retail, technology, construction and so on. It helps to create a financial baseline against which project managers can benchmark the current status of their project costs and realign the direction if needed.
See how EcoSys can help you achieve Total Cost Management
Visit the cost control webpage On-Demand webinar with AACE
Why is Project Cost Management Important?
The importance of cost management is easy to understand. To take a simple, real-life example, if you decide to build a house, the first thing to do is set the budget. When you have a sense of how much to spend on the project, the next step is to divide the high-level budget into expenses for sub-tasks and smaller line items.
The budget will determine critical decision points such as: which designer to hire — someone who will construct and deliver the project end-to-end, or someone who can help with a few elements and be able to work for a smaller budget? How many stories should the structure have? What quality of materials should be used?
Without a predefined budget, not only is it difficult to answer these questions, but it becomes impossible to assess whether you are progressing in the right direction once the project is underway. In large organizations, the scale of this problem is further heightened due to concurrent running of multiple projects, change in initial assumptions and the addition of unexpected costs. That’s where cost management can help.
By implementing efficient cost management practices, project managers can:
- Set clear expectations with stakeholders
- Control scope creep by leveraging transparencies established with the customer
- Track progress and respond with corrective action at a quick pace
- Maintain expected margin, increase ROI, and avoid losing money on the project
- Generate data to benchmark for future projects and track long-term cost trends
The Four Steps in Project Cost Management
While cost management is viewed as a continuous process, it helps to split the function into four steps: resource planning, estimation, budgeting and control. They are mostly sequential, but it’s possible that some resource changes happen midway through the project, forcing the budgets to be adjusted. Or, the variances observed during the control process can call for estimate revisions.
Let us look at each of these four steps in detail.
1. Project Resource Planning
Resource planning is the process of identifying the resources required to execute a project and take it to completion. Examples of resources are people (such as employees and contractors) and equipment (such as infrastructure, large construction vehicles and other specialized equipment in limited supply).
Resource planning is done at the beginning of a project, before any actual work begins.
To get started, project managers first need to have the work-breakdown structure (WBS) ready. They need to look at each subtask in the WBS and ask how many people, with what kind of skills are needed to finish this task, and what sort of equipment or material is required to finish this task?
By adopting this task-level approach, it becomes possible for project managers to create an accurate and complete inventory of all resources, which is then fed as an input into the next step of estimating costs.
A few tips to consider during the process:
- Consider historical data—past schedules and effort—before determining sub-tasks and the corresponding resources.
- Take feedback from SMEs and team members—a collaborative approach works well especially in projects that do not have past data to use.
- Assess the impact of time on resource requirements. For instance, a resource may be available only after a few months, dragging the project’s schedule. This could have an impact on cost estimation.
- Although this step happens at the planning stage, project managers need to account for ground realities. For example, you may identify the need for a resource with certain expertise, but if such a resource is not available within the organization, you have to consider hiring a contractor or training your team to get them up to speed. All of these variables impact cost management.
2. Cost Estimation
Cost estimation is the process of quantifying the costs associated with all the resources required to execute the project. To perform cost calculations, we need the following information:
- Resource requirements (output from the previous step)
- Price of each resource (e.g., staffing cost per hour, vendor hiring costs, server procurement costs, material rates per unit, etc.)
- Duration that each resource is required
- List of assumptions
- Potential risks
- Past project costs and industry benchmarks, if any
- Insight into the company’s financial health and reporting structures
Estimation is arguably the most difficult of the steps involved in cost management as accuracy is the key here. Also, project managers have to consider factors such as fixed and variable costs, overheads, inflation and the time value of money.
The greater the deviation between estimation and actual costs, the less likely it is for a project to succeed. However, there are many estimation models to choose from. Analogous estimation is a good choice if you have plenty of historical cost data from similar projects. Some organizations prefer mathematical approaches such as parametric modeling or program evaluation and review technique (PERT).
Then there is the choice between employing a top-down versus bottom-up approach. Top-down typically works when past costing data are available. In this, project managers usually have experience executing similar projects and can therefore take a good call. Bottom-up works for projects in which organizations do not have a lot of experience with, and, therefore, it makes sense to calculate a cost estimate at a task-level and then roll it up to the top.
Cost Estimation as a Decision Enabler
It’s useful to remember that cost estimation is done at the planning stage and, therefore, everything is not yet concrete. In many cases, project teams come up with multiple solutions for a project, and cost estimation helps them decide how to proceed. There are many costing methodologies, such as activity-based costing, job costing, and lifecycle costing that help perform this comparative analysis.
Lifecycle costing, for instance, considers the complete end-to-end lifecycle of a project. In IT projects, for example, maintenance costs are often ignored, but lifecycle costing looks long-term and accounts for resource usage until the end of the cycle. Similarly, in manufacturing projects, the goal is to minimize future service costs and replacement charges.
Sometimes the estimation process also allows teams to evaluate and reduce costs. Value engineering, for example, helps to gain the optimal value from a project while bringing costs down.
3. Cost Budgeting
Cost budgeting can be viewed as part of estimation or as its own separate process. Budgeting is the process of allocating costs to a certain chunk of the project, such as individual tasks or modules, for a specific time period. Budgets include contingency reserves allocated to manage unexpected costs.
For example, let’s say the total costs estimated for a project that runs over three years is $2 million. However, since the budget allocation is a function of time, the project manager decides to consider just the first two quarters for now. They identify the work items to be completed and allocate a budget of, say, $35,000 for this time period, and these work items. The project manager uses the WBS and some of the estimation methods discussed in the previous section to arrive at this number.
Budgeting creates a cost baseline against which we can continue to measure and evaluate the project cost performance. If not for the budget, the total estimated cost would remain an abstract figure, and it would be difficult to measure midway. Evaluation of project performance gives an opportunity to assess how much budget needs to be released for future phases of the project.
Another reason to firm up budgets is that organizations often rely on expected future cash flows for their funding. During the initial phases, the project manager has a limited financial pool and has to set targets accordingly. It’s similar to building the foundation and one floor of the house in the initial few months and later completing the rest of the project, as you save more.
4. Cost Control
Cost control is the process of measuring cost variances from the baseline and taking appropriate action, such as increasing the budget allocated or reducing the scope of work, to correct that gap. Cost control is a continuous process done throughout the project lifecycle. The emphasis here is as much on timely and clear reporting as measuring.
Along with the cost baseline, the cost management plan is an essential input for cost control. This plan contains details such as how project performance will be measured, what is the threshold for deviations, what actions will be done if the threshold is breached, and the list of people and roles who have the executive authority to make decisions.
Earned value management (EVM) is one of the most popular approaches to measuring cost performance. Let’s take an example.
At the end of a week, you measure the progress of task X and find that it’s 25% complete. Now, how do you assess if you are on track to meet the task budget?
First, a project manager calculates the planned value for this task (at the planning stage). Let’s say, Task X has a budget of $4000 and is expected to be 50% complete by the week.
Planned value (PV) of task X by the week = $4000 * .5 = $2000
Earned value (EV) of task X by the week = $4000 * .25 = $1000
Now, you also determine the actual cost (AC) of the work, which involves other variables such as equipment and material costs (say, $800).
Schedule variance = EV – PV = $1000 – $2000 = -$1000.
Cost variance = EV – AC = $1000 – $800 = $200.
The negative schedule variance indicates that the task is falling behind, but the positive cost variance indicates that it’s under budget.
While dealing with hundreds of tasks in huge projects, cost control can provide the level of transparency that decision makers require to respond quickly to the situation.
Project Cost Software
Cost management, similar to other aspects of project management, becomes complex with many variables in play. The process itself is elaborate and demands attention to detail along with a rigorous approach. The use of project management software can simplify this process considerably.
Let’s look at a few advantages of using project cost management software :
- Automation of cumbersome quantitative analysis during estimation and measurement helps avoid manual errors
- Integration of data across planning, estimation, budgeting, and control enables continuous monitoring and quick, proactive responses, rather than one-off interventions
- Decision-making is made easier as cost software helps evaluate alternate solutions using scenario forecasting and what-if analysis
- Clear and easy reporting in the form of dashboards and other rich UIs
- The complexity of multicurrency management in projects across different geographical locations is simplified with project cost software
- Many project cost solutions allow third-party integrations, so data can be pooled and analyzed
- Benchmarking and standardization are possible with the availability of performance data across multiple projects
Cost Management and Enterprise Project Performance
In the 2018 PMI Pulse of the Profession Report , 41% of respondents said that their projects are of high complexity. It’s no surprise then that 40% of the survey participants consider “investing in technology to better enable project success” as a top priority.
Cost management is closely tied to the capability of an organization to succeed in current as well as future projects. Investing in a reliable cost management software can result in huge savings. A good solution to cost management will not treat it as a siloed function but leverage it as vital to project and portfolio performance, and correlate data across projects.
Visit these additional resources for more information on project cost management:
Product: EcoSys
Solutions: Project Portfolio Management, Project Controls & Project Management, Earned Value Management
Process Area: Cost Control
Blog: 6 Best Practices for Project Controls , Foundations of Good Earned Value Management
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Project Cost Management
Successful projects accomplish the stated project goals, with minimal scope creep, and do so within the approved budget. By implementing project cost management into your project management processes, you can control the costs of your project while maintaining quality and meeting deadlines.
Table of Contents
What is project cost management?
Why is cost management important, the benefits of implementing project cost management., the challenges of project cost management., project cost management tools., frequently asked questions..
Cost management in project management involves the planning, estimating and overall control of budget. Cost management processes are in place to help project teams plan and control budgets during the project life cycle.
While cost management overall is a complicated process and a critical project management knowledge area , we can break it down into four processes:
1. Resource planning.
While resource management is in place to plan, allocate, and schedule the resources needed for each stage of a project, resource planning looks specifically at the costs associated with each of these resources.
Because of the complexity of this process, a work breakdown structure (WBS) can help to simplify and provide clarity.
Using your resource management software , identify what resources will be used to complete each item in the WBS, determine the associated costs, and perform a cost-benefit analysis .
2. Cost estimation.
Cost estimation is the process of approximating the costs associated with each of the resources required for all scheduled activities. It’s an important part of the cost management process.
Cost estimating forecasts the cost of completing a project within a defined scope. Given that scope tends to shift throughout the life of a project, cost estimation is not a one-time process.
Effective cost management requires project managers to keep abreast of budgetary changes during a project’s lifespan. These estimations sum up all the costs involved in successfully completing a project.
To get a good estimate at the costs, you can use one of the following techniques:
- Analogous estimating – Past projects should inform the cost estimate, here. Analogous estimations use previous, similar projects as a reference point for costing up the new one.
- Parametric modeling – Mathematical formulas, based on Regression Analysis or Learning Curve models, inform potential project cost estimations.
- Bottom-up estimating – Costs are based on known quantities, such as individual work or item cost and duration or time spent on individual tasks.
3. Cost budget.
Cost estimations lead directly into cost budgets. Here, you’ll work out the base costs and any additional requirements for the project .
A good project budget will help you make key decisions with respect to the project schedule and resource allocation constraints.
These budgets should account for everything from direct labor costs, to material costs, factory costs, equipment costs, administrative costs, and software costs.
To set the cost budget, consider the following techniques:
- Cost aggregation – This requires you to aggregate or combine costs from an activity level to a work package level. The final sum of the cost estimates is applied to the cost baseline.
- Reserve analysis – With this cost management method, you create a buffer or reserve to protect against cost overruns. The degree of protection should be equivalent to the risk foreseen in the project. The buffer is part of the project budget, but not included in the project baseline.
- Historical data – Under this technique, you use estimates from closed projects to determine the budget of the new project. This is very similar to analogous estimation.
- Funding limit reconciliation – Here, you adhere to the constraints of a funding limit. This is based on the limited amount of cash dedicated to your project. To avoid large variations in the expenditure of project funds, you may need to revise the project schedule or the use of project resources.
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4. Cost control.
Good project managers should have a constant eye on cost and potential scope creep . This includes being vigilant for times when costs vary from estimations. Cost control also involves informing the stakeholders of cost discrepancies that vary too much from the budgeted cost.
Controlling the budget means being aware of the:
- Original budget
- Approved costs
- Forecasted costs
- Actual costs
- Committed costs
Budget control involves being aware of and acting on changes and issues as and when they occur.
To effectively control project costs, consider these tools and techniques:
- Earned value management – This uses a set of formulas to help measure the progress of a project against the plan. It integrates schedule, scope and costs to measure project success against planned and actual values. Benefits include measuring cost alongside other factors.
- Forecasting – This uses a project’s current financial situation to project future costs. The forecast is based on budgeted cost, total estimated cost, cost commitments, cost to date, and any over or under budgeted costs. It can be useful as part of the controlling and monitoring phase .
- To-Complete Performance index (TCPI) – A cost management tool that represents the level of project performance needed for future work to meet the budget. Useful to make decisions about efficiency when a project is under way. A TCPI figure above 1.0 indicates your project is running above budget.
- Variance analysis – A technique that involves analyzing the differences between the budget and final cost projections.
- Performance reviews – These are used to check the health of a project. A performance review includes an analysis of project costs, schedule, scope, quality and team morale. This may help to gain a broader view — for instance, if you suspect an unprofitable project will cause talent drain in the long term.
By learning how to estimate expenses, determine budgets, and control costs, you can be a better project manager and leader. Effective cost management will help you get projects done on time and under budget, the golden ticket for any successful project manager.
In project management, the cost management process is an important tool to keep profits healthy, reducing the risk your project could become unviable. When you define what healthy finances look like, it’s easy to make decisions in real time when work is underway.
Ask yourself:
- Does an aspect of the work need scaling back?
- Do you need to cut investment in a low-priority area?
The earlier these questions are answered, the more opportunity there is for a project manager to recalibrate and preserve return on investment (ROI).
The importance of cost management comes into play from the very beginning of the project lifecycle, however. This is because costs and budgets affect key project decisions — from the people you hire to the materials you use.
When a project doesn’t stay within budget, it can remain incomplete, harming a project manager’s reputation. In a worst-case scenario, mismanaged costs can make an organization unviable.
Great project cost management lets you generate data to share with stakeholders. When you view this using intuitive software, it’s easy to lift insights for future project plans.
The project cost management process empowers you to plan a project well, make informed decisions once activities are underway, and measure success.
Keep track of multiple types of project cost, including:
- Direct costs – These include money earmarked for software fees and other mission-critical overheads.
- Indirect costs – In business, indirect costs are a fact of life. Each individual project contributes to your organization’s electricity bill, for instance.
- Fixed costs – One-off fees may be considered fixed, since they aren’t linked to time management.
- Variable costs – This type of cost rises if a project is extended or delayed. Staffing costs are a common example.
- Sunk costs – These are purchases that have already been made, effectively the cost is deemed to be sunk.
Understanding each can help you to differentiate and find ways to make savings.
When elements of your project plan change, the corresponding cost figures will alter too. Losing grip of your project’s scope is a fast way to also lose track of costs, putting your entire project at risk.
Accurate cost management also requires schedule and cost integration. Communication can be key for this. Ask your finance analysts to provide direction to managers responsible for aspects of project delivery, and for teams to report back on issues in turn. If tasks are stretching beyond timelines in the original plan, this should be reflected in a project manager’s calculations right away.
Finally, when reporting is slow or inaccurate, it makes the above aims harder to achieve. Check figures for accuracy regularly to avoid surprises.
A work management software like Adobe Workfront provides a centralized location for all project data and information, helping you to stay aware of variances in the budget, make approvals, track comments, and see all-important project data.
How do you manage project costs?
To manage project costs effectively, bring together all elements of a strong project cost management plan. This involves resource planning, cost estimation, cost budgeting and cost control.
Managing project costs requires strategic thinking and careful processes at every stage. Though it’s important to budget well, losing track of time or resources can also increase costs.
What are the three main methods of cost estimating?
The three main methods of estimating cost are the:
- Expert judgement – The quickest and involves asking expert people or groups to provide insight. They may use data on past projects also.
- Parametric estimating – Uses statistical information about the relationship between variables and may use an algorithm to map past project data onto current plans.
- Analogous estimating – something of a half-way house between the above two methods. Uses values such as scope, duration and project-specific measures from past activities. The actual costs in previous projects help to shape estimates.
How are project costs aggregated?
Project costs are aggregated – combined and calculated – by adding the baseline cost estimates for each element of a project and its subtasks. With the sum of the lowest estimates for each part, a project manager can get a sense of the minimum costs to plan for.
Cost aggregation also allows you to see scheduled spending for each subtask and time period. It also helps to calculate the cost-performance baseline, helping project managers keep track of cash flow throughout the project life cycle .
Types of Project Costs - Examples of the Different Variables in Project Cost Management
Types of Costs
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All projects incur costs. Project costing is a key factor in making project decisions. As a project manager, you need to be aware of the type of costs that impact your project.
Fixed Costs
Variable costs.
duration and can easily span several years.
Direct Costs
Indirect costs.
Indirect costs are those that are shared across multiple projects. Indirect costs are sometimes also referred to as Oversight costs. For example, in software development projects, it is common for a project manager or an architect to be partially allocated across several projects. Hence, the cost of the project manager or architect will be shared among the projects they are allocated to.
Project managers are usually an indirect cost to the project. This is because their work is to supervise. They don’t actually do the work! The people who do the work, like developers and designers, are Direct Costs to the project .
you are making a cup of tea and spill the milk that was to be used in the tea, then the value of the milk is your sunk costs.
Online Associate Degree In Project Management: Everything You Need To Know
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Published: Mar 2, 2023, 5:05pm
If you enjoy steering projects from ideation to delivery, project management might be for you.
A project can constitute almost any outcome-oriented process—like the construction of a building or launching a new perfume scent, for example. But no matter the end goal, all project managers share a common pursuit of driving their project to completion.
Earning a project management associate degree can help you prepare for a career as a project manager. Below is an overview of what you should know about the degree.
Southern New Hampshire University
Drive success and bring ideas to life with a comprehensive and innovative project management program from Southern New Hampshire University
What Is an Online Associate Degree in Project Management?
An online associate degree in project management is a two-year undergraduate program that prepares students to work in project management, often in business-oriented settings.
Project managers oversee the budget, schedule and other moving parts of a project. They may also act as a liaison between the client or customer and the project development team.
Regardless of industry, project managers must be quick on their feet. They should have excellent managerial skills and be comfortable juggling the moving parts of a project. Some project managers may be assigned to multiple projects at once, which requires time management and prioritization skills.
Project management students typically earn their associate degree after high school. From there, they may transfer to a four-year project management degree or enter the workforce directly.
Students in online project management programs learn the fundamentals of initiating, executing, coordinating, monitoring and delivering all aspects of a project or event. In many cases, associate-level students earn a business management degree with a concentration in project management since dedicated project management associate degree programs are relatively limited.
What Can You Do with an Online Associate Degree in Project Management?
Earning an associate degree in project management opens doors to a myriad of professional development opportunities. After completing an associate degree, some students go on to pursue a bachelor’s degree in project management, a business administration bachelor ’s or a related degree. Others enter the workforce.
Project managers are employed in sectors like construction, administrative and support services, finance and insurance, manufacturing, and professional, scientific and technical services. Typical career options for online project management associate degree-holders include:
- Construction Management : Construction management professionals utilize project control and management, design, cost estimation and business strategy skills to oversee construction projects. Typically, graduates with associate degrees (plus a few years of work experience) go on to supervise smaller construction projects.If you want to start overseeing large construction projects, you’ll usually need a bachelor’s degree in construction, business, engineering or a related field.
- Event Planning and Management : Event planners and managers plan and arrange conferences, events and other gatherings. They determine and execute the scope of the event, including its timeline, location and projected costs. Event planners and managers typically need a bachelor’s degree in business, communications or social science.
- Administrative and Facilities Management : Administrative services and facilities managers plan, direct and coordinate activities and projects to keep an organization running efficiently. Educational requirements for administrative and facilities managers vary. A high school diploma or GED certificate may suffice in some instances, but certain roles might require an associate or bachelor’s degree.
- IT Project Management : IT project managers plan, coordinate and direct projects related to an organization’s computer systems. They upgrade hardware and software, maintain cybersecurity protocols and oversee the execution of an organization’s technology goals.IT project managers require a bachelor’s degree in computer or information science. An associate degree in project management can serve as a gateway to a career in IT project management.
Admission Requirements for an Online Associate Degree in Project Management
Admission requirements for online associate degrees vary by institution. Generally, most programs require that students have a high school diploma or a GED certificate.
In California, for example, both resident and nonresident students seeking an associate degree from a state community college must present a high school diploma or the equivalent. Some programs require students to be at least 18 as well.
If you’ve taken a standardized test such as the ACT or the SAT, you might submit your score with your application. However, standardized test scores are not always required. Check with your prospective program to see if test scores are needed to apply.
Common Courses in an Online Project Management Associate Degree
While specific courses vary by school, here are a few common courses you might take in an online project management associate program.
Introduction to Business
An introduction to business class touches on the basic principles and practices of working in business. This course lays a solid groundwork for studying other business subjects down the line.
Principles of Management
Principles of management courses teach students the fundamentals of organizing, controlling, directing and communicating. By the end of this course, you’ll understand how to manage teams and get projects out the door.
Principles of Financial Accounting
Financial accounting is an important tool in any project manager’s arsenal. A principles of financial accounting course provides insight into analyzing, summarizing, reporting and interpreting financial information.
Professional Research and Reporting
Largely communications-based, this course focuses on research, listening, critical reading, thinking, analysis, interpretation and design used in professional reports and presentations.
Business Finance
This course provides insight into the basics of financial statement analysis, the time value of money, cash flow management, risk and return and sources of financing.
Frequently Asked Questions (FAQs) About Online Associate Degrees in Project Management
Is an associate in project management better than a project management certification.
The answer to this question depends on your professional and academic goals. If you plan to enter the workforce directly after your program, a credential such as the Certified Associate in Project Management (CAPM)® credential might be right for you. CAPM certification prepares candidates for entry-level project management positions. But if you plan on pursuing a more advanced degree, an associate might give you a better foundation.
For more information, see our guide: Is CAPM Certification Worth It?
What degree is best for a project manager?
Because project managers work in a diverse array of professional settings, no one specific degree trumps the rest. An associate degree in project management can help you gain an understanding of what kind of project management you’d like to specialize in. But a bachelor’s degree in business, business administration, IT or another related field can also help you get your foot in the door.
Can you work as a project manager without a degree?
Yes. Some project management positions require only a high school diploma or equivalent, plus some work experience. In some cases, a project management certification may suffice. However, most higher-level project management positions require a bachelor’s degree or higher.
What skills are required of project managers?
Regardless of their sector, project managers must have excellent communication, budgeting and collaboration skills. Since projects rarely go exactly to plan, good project managers should be equipped with quick problem-solving abilities. People skills are also a must for project managers, especially for those who oversee large teams. Intercultural and language skills are a bonus for project managers who work with international team members.
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Cecilia Seiter is a freelance writer and author based in Oakland, CA. She writes about education, corporate culture, renewable energy and the Internet of Things.
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Tesla has a new master plan. It's not a new car — just big thoughts on planet Earth
Camila Domonoske
Tesla CEO Elon Musk is pictured as he attends the start of production at Tesla's "Gigafactory" in Gruenheide, southeast of Berlin in Germany. on March 22, 2022. Tesla held an investor day on Wednesday. It did not reveal a new vehicle, but it unveiled some of its big-picture ideas on climate change. Patrick Pleul/POOL/AFP via Getty Images hide caption
Tesla CEO Elon Musk is pictured as he attends the start of production at Tesla's "Gigafactory" in Gruenheide, southeast of Berlin in Germany. on March 22, 2022. Tesla held an investor day on Wednesday. It did not reveal a new vehicle, but it unveiled some of its big-picture ideas on climate change.
Anticipation had built for days. Tesla was poised to unveil a new strategic plan at its Investor Day, only the third time the company has laid out a "master plan" that would guide its future.
Analysts were eager to see a new Tesla model — specifically, a much cheaper Tesla, one that could make the most popular electric vehicle brand in America accessible to a far broader swath of buyers.
But at its Investor Day on Wednesday, Tesla did not reveal that vehicle.
Elon Musk's new master plan? Ending fossil fuels.
Tesla slashed its prices across the board. We're now starting to see the consequences
Instead of a shiny new car, the company went big-picture on climate change, making the case for an aggressive global transition away from fossil fuels — one with a vast number of electric vehicles and batteries, Tesla's core products, as the key components.
Good for a company that has always touted its green credentials, but Wall Street would have preferred a new car. Tesla stock dropped markedly in after-hours trading.
Musk had a lot in his mind about planet Earth
In some ways though, it was vintage Tesla.
Tesla has already radically reshaped the climate conversation, by spurring the auto industry to embrace electric vehicles.
The new "master plan" extended beyond the auto sector to talk about decarbonizing the global electric grid as well as all industry, shipping and air travel, too.
Musk opened the event by arguing the world can rapidly pivot to renewable energy with the help of batteries (to store solar power to use at night, for instance) and, of course, battery-powered electric vehicles. This new "master plan" also nodded to heat pumps and hydrogen for industrial uses.
Tesla's profits soared to a record – but challenges are mounting
Lots of researchers, analysts and nonprofit groups have charted out paths to combat climate change. Most emphasize that time is running out, and the scale of change required is daunting.
Musk's tone was more optimistic. He said Tesla had done the math and the switch would cost $10 trillion, less than the world would spend on fossil fuels over the same timeframe. Fully $7 trillion of that would be for electric vehicles — the market Tesla revolutionized, and intends to dominate worldwide.
"Today is not just for investors of Tesla, but anyone who is an investor in Earth," Musk said. "Earth can and will move to sustainable energy, and it will do so in your lifetime."
A Tesla charging station for electric cars is seen at the parking lot of a mall in Puebla, Mexico, on Feb. 26, 2023. Tesla executives talked about new ideas about every facet of its business, including on charging, at its investor day. Pedro Pardo/AFP via Getty Images hide caption
A Tesla charging station for electric cars is seen at the parking lot of a mall in Puebla, Mexico, on Feb. 26, 2023. Tesla executives talked about new ideas about every facet of its business, including on charging, at its investor day.
Making the case for innovation, despite no big reveal
With no brand new vehicle to drive out on stage, Tesla executives and engineers shared information about how the next generation of vehicles will be designed and built.
The company claims to have a radically reinvented assembly process, which involves making the front and back of the car separately, that could cut production costs by 50%. Tesla also says future vehicles will require no rare earth elements and could incorporate any battery chemistry, making it easier to source raw materials.
To bolster its reputation as an innovative company, Tesla also bombarded investors with examples of how it has developed new features and cut costs.
Tesla boasted of a software update to automatically adjust air suspension mid-drive, based on data from other vehicles about where the road is rough, and a strategy to cut costs on Supercharger stations by preassembling entire stations and dropping them down from a crane, instead of installing each charger individually on location.
A Tesla Model Y car is shown at a Tesla showroom in a shopping mall in Beijing, China, on April 29, 2022. Tesla shares fell after it did not reveal a new car at its investor day. Jade Gao/AFP via Getty Images hide caption
A Tesla Model Y car is shown at a Tesla showroom in a shopping mall in Beijing, China, on April 29, 2022. Tesla shares fell after it did not reveal a new car at its investor day.
A head start in the race for electrification
The investor day came as investors were feeling more optimistic about Tesla's future, despite growing competition.
Every major automaker now believes that zero-emissions vehicles are the industry's future, and they are racing to catch up with Tesla. That makes it likely that Tesla's share of EV sales will shrink, as more competition comes in. That was one reason for the company's precipitous drop in share prices last year.
But Tesla is producing vehicles at a higher volume than its rivals, and it recently cut prices sharply. That has increased interest in Tesla vehicles, and the move was well-received by Wall Street.
Buying an electric car? You can get a $7,500 tax credit, but it won't be easy
And Teslas remain popular with drivers. The company just won the top award for "Overall Loyalty" to a make in S&P Global Mobility's Automotive Loyalty Awards. In general, returning car shoppers stick with their previous brand about 50% of the time. For Tesla buyers, a solid two-thirds return to Tesla.
"Tesla had a very, very strong year," says Vince Palomarez of S&P Global Mobility. "They have produced a product that is attractive to a consumer ... They lowered their price. They're also getting access to the tax credit again."
Palomarez also notes that Tesla owners often install a Tesla charger at their home. That could be an added incentive to stick with the brand, instead of needing to swap out equipment or use an adapter every charge. He compared it to Apple's proprietary chargers.
"If you have an iPhone and you have an iPad and you have a MacBook, you know, you're going to get the Apple Watch .... the infrastructure is built there," he says.
- electric cars
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Project and Job Costing Example This Event Cost Analysis Examples also helps the company to realize whether the project undertaken is an efficient one or not. Project costing is the total estimated cost of any project created to allocate a project budget to the project manager and their team.
A total project cost in a business plan is necessary. A cost management plan can help you to allot a sufficient amount for the projects in your business. To know more about project costs, you may want to know the types of project costs. They are the following: Fixed Cost: Fixed cost is all the costs that a company should pay.
Here is an example of project cost analysis being used in the workplace: Priya, the owner of Carmen's Phone Store, wants to create a marketing campaign that generates $20,000 in revenue by increasing brand awareness and promoting products to customers on more popular television platforms.
Business Project Plan Example mngeo.state.mn.us Details File Format PDF Size: 369 KB Download Project Work Plan Template Example acl.gov Details File Format PDF Size: 125 KB Download Project Planning Template Example cperryman.com Details File Format PDF Size: 163 KB Download Education Project Plan Structure Example oulu.fi Details File Format PDF
Just as an example, the total spending with the estimates shown here, the theoretical "year's worth of spending," is $182,000 (which you don't see on the illustration, by the way, but take my word for it). The total for the first six months is $93,000. If Magda sticks to those old formulas, she can't start the business.
If, for instance, the cost of implementing a new data field in an IT system were $20,000 according to historical data, and a project required 15 new data fields, the total cost of this part of the project would be 15 x $20,000 = $300,000.
This cost estimate template shows gross profit and margin of profit to help determine the total estimated expense for a new home construction project. The spreadsheet provides columns for construction categories, unit quantities, price per unit, base prices, markup amount, and profit.
The financial projections of the first business show a high fixed cost structure. the business plans to start by investing heavily in production facilities, machinery and equipment to manufacture and distribute its own product. The consequence of this decision is high fixed costs but lower variable costs.
Traditionally, a marketing plan includes the four P's: Product, Price, Place, and Promotion. For a project management business plan, your marketing strategy should include the following: Product: In the product section, you should reiterate the type of project management company that you documented in your company overview.
Project Cost Estimation Example Good cost estimation is essential for project management success. Many costs can appear over the project management life cycle, and an accurate cost estimation method can be the difference between a successful plan and a failed one. Cost estimation, however, is easier said than done.
Now, we will review eleven examples of project plans and samples. #1. Simple Cross-Functional Project Plan. Managing complex projects can be easy by using a straightforward cross-functional project schedule. It improves the success rate and decreases the likelihood of expensive execution faults.
The assumed project cost of equipment usually includes the cost of new equipment needed for the project and the expenses incurred from equipment maintenance. For example, a construction company ...
Sample project plan example - Section 4: Cost/budget management. This section of the sample project plan example describes the project's cost management plan or provides a reference to where it is stored. This section should contain step 6, "Estimate each task's costs outputs".
What Are Project Costs? Project costs are the funds required to perform a planned business endeavor, and they are a primary subject in project budgeting and cost management. Costs are the entities you estimate when developing a budget. They are the money you actually invest in work and the amounts you track and control until the very end of a project.
How to Create a Cost Management Plan Cost management is sometimes also known by its more specific sub-task names, like spend management, cost transparency and cost accounting. It is typically made up of four steps: resource planning, cost estimation, budgeting and cost control.
Project Budget Example: Real project manager explains The first project budget example is for a small construction project. You can use the following template for most of the projects. But you need to keep to one critical concept: Click to see full size image. You need to use Work Breakdown Structure elements here.
For example, let's say the total costs estimated for a project that runs over three years is $2 million. However, since the budget allocation is a function of time, the project manager decides to consider just the first two quarters for now.
Cost management processes are in place to help project teams plan and control budgets during the project life cycle. While cost management overall is a complicated process and a critical project management knowledge area, we can break it down into four processes: 1. Resource planning. While resource management is in place to plan, allocate, and ...
There are five types of costs in a typical project: Fixed Variable Direct Indirect Sunk Fixed Costs Fixed costs are those that do not change throughout the life-cycle of a project. For example, if you are constructing a road, the excavators and bulldozers are fixed costs.
For example, let's say you are a business owner who wants to develop a new mobile app. Without agile project management, you might spend months creating a comprehensive project plan, outlining ...
An online associate degree in project management is a two-year undergraduate program that prepares students to work in project management, often in business-oriented settings. Project managers ...
Musk's new "master plan" for Tesla didn't reveal any new vehicle models. Instead he presented a big-picture case for climate action, followed by smaller examples of innovations and cost-cutting.