BSBPMG514 - Manage Project Cost 1

BSB51415 Diploma of Project Management
BSBPMG514 Manage project cost

Assessment 1
Submission details
This assessment task must be submitted online by the due date specified by your
Trainer/Assessor and the Assessment Plan for this unit of competency.
Students are required to answer all questions within each assessment task and be
assessed as “Satisfactory” in each to gain competency in Manage project cost
Any variations to this arrangement must be approved in writing by the assessor.
Performance objectives
This assessment will require you to :
Analyse different models and tools utilized in managing project cost and gain an
understanding of the various components need in developing and implementing a
project.
Project Description
Analyze different models and tools utilized in managing a project’s cost and gain an
understanding of the various components needed in developing and implementing a
project.
To complete this assessment refer to the lecture notes and material on Moodle
Your instructor will ensure you are provided with the correct equipment and/or
materials to complete the assessment. They will also inform you of how long you
have to complete the task.
BSBPMG514 Assessment 1 Version: v17.0 Page 1 of 7

Developed by: Nortwest Pty Ltd Approved by: AM Issued: June 2017 Review: June 2018
BSB51415 Diploma of Project Management
BSBPMG514 Manage project cost
Assessment 1
Q1.
Describe two (2) methods and two (2) tools that could be used for costing a project and
conducting a cost analysis.
TOOLS
- Parametric Estimating: this method uses historical data to calculate cost

estimates, but it also utilizes statistical data. It takes variables from similar
projects and applies them to the current project. For example, in a previous
project pf a house we take the cost of concrete per cubic meter, then calculate
the concrete requirement for the current project and just multiply it with the
cost obtained from the previous project. It also can be used to calculate the cost
for workers, material, …
- Bottom-up Estimating: this technique is also called “definitive technique’

because it is the most accurate, time-consuming, and costly technique for
estimating cost. In this technique, the cost of each activity is determined with the
greatest level of detail at the bottom level and then rolls up to calculate the total
project cost.
METHODS
- Expert judgment: this is the most common way people get an estimate – by
talking to people with the best hands-on experience, and always make sure that
everyone has the same understanding of what needs to be delivered.
- Resource costing: it is a common technique for cost estimating, by listing the

resources you will need for the project and totaling their costs. Typical resources
include equipment, material, services and labor.

Q2.
a. Describe two (2) different strategies that could be used to manage project costs
b. Outline the most appropriate strategy for responding to budgetary problems before they arise and
after they arise.
- By reallocating resources: this strategy can be a very useful choice that keeps the
project on budget while addressing potential shortcomings. Let’s say a team member is
spending 10 hours a week on a manual process that could be done in an hour with the
right software.
- By requiring skills: project management typically involves ongoing research and a keen
awareness of changes in the business landscape that can impact a project in its budget.
This is a reason for why so many times professionals with a knack for problem-solving are
often brought into project management.
I would choose the strategy of reallocate resource, it is a quick and easy solution,
because the only thing you need to do is basically find a good software. It’ll save time on
solving for may times mathematical problems in a short period of time, where a team
member would spend 10 hours instead.

Q3.
a. Explain why should costs be reviewed against the project outcomes
b. Outline one process that could be used to review costs against outcomes
Costs should be reviewed to compare with the actual costs. Costs may be affected by
scope creep, poor planning, schedule delays, progressive elaboration, or any other
factors. Reviewing the costs, and all the project, gives a foot view of the project’s
performance.

Q4.
a. Outline why it is important for each member of the organization to adhere to organizational
policies and procedures

b. Describe the purpose of policies and procedures as they relate to project management roles
It is important to the business growth. You need to adhere to policies and procedures if
you want to improve your business, also because it allows employees to clearly
understand their roles and responsibilities within predefined limits. Basically, policies and
procedures allow management to guide operations without constant management
intervention, avoiding increasing of expenses.
Policies and procedures have many benefits, as we can see below:
- Employees understand clearly the tasks they have;
- Policies and procedures enable the workforce to clearly understand individual

and team responsibilities, saving time and resources.
- Clearly written policies and procedures allow managers to exercise control by

exception rather that manage their staff.
- It provides legal protection. Juries apply the ‘common person’ standard. If it is

written clearly so that outsiders understand, the company has better legal
footing if challenged in court.


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BSB51415 Diploma of Project Management

BSBPMG514 Manage project cost

Any variations to this arrangement must be approved in writing by the assessor.

This assessment will require you to :

BSBPMG514 Assessment 1 Version: v17.0 Page 1 of 7

- Parametric Estimating: this method uses historical data to calculate cost

- Bottom-up Estimating: this technique is also called “definitive technique’

- Resource costing: it is a common technique for cost estimating, by listing the

BSBPMG514 Assessment 1 Version: v17.0 Page 2 of 7

BSBPMG514 Assessment 1 Version: v17.0 Page 3 of 7

BSBPMG514 Assessment 1 Version: v17.0 Page 4 of 7

BSBPMG514 Assessment 1 Version: v17.0 Page 5 of 7

- Employees understand clearly the tasks they have;

- Policies and procedures enable the workforce to clearly understand individual

- Clearly written policies and procedures allow managers to exercise control by

- It provides legal protection. Juries apply the ‘common person’ standard. If it is

BSBPMG514 Assessment 1 Version: v17.0 Page 6 of 7

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