Create A Budget Analysis Report Of The Current Failed Projec

Create A Budget Analysis Report Of The Current Failed Project And A Pr

Create a budget analysis report of the current failed project and a project estimation report for the turnaround project. This portfolio work project, a budget analysis and cost estimating artifact, is based on the Revive LLC case study for the development of a new online employee orientation module. Both human resources (HR) and information technology (IT) employees, as well as contractors, will be used in this project. Cost management is defined as "primarily concerned with the cost of the resources needed to complete the project activities" (Project Management Institute, 2017, p. 233.).

Also, consideration needs to be taken with respect to project costs and stakeholder differences. Financial performance techniques provide both internal and external measurement capabilities that allow for decision making, financial analysis, and mitigation strategies. Effective cost management involves establishing a cost baseline for measuring project performance. Establishing the project baseline is like establishing a point of reference. Whatever that point of reference, it will become the baseline against which project performance will be measured.

This cost baseline becomes the basis for more advanced techniques, such as earned value management (EVM). Project cost management includes planning for the resources needed: the people, equipment, and materials. With the use of proven estimating techniques, an estimate is presented to the project sponsor and management for approval. Upon approval, the cost estimate becomes the official budget for the project. As the project goes through the normal project lifecycle, cost control techniques track and monitor the budget, which allow you to make sure you will not incur a budget overrun.

Paper For Above instruction

Introduction

The importance of effective project cost management cannot be overstated, especially when dealing with projects that have experienced failure. This report presents a comprehensive budget analysis of a failed project undertaken for the development of a new online employee orientation module by Revive LLC. Additionally, it outlines a project estimation for a turnaround initiative intended to rectify previous shortcomings and steer the project towards successful completion. Recognizing the complexities of stakeholder interests, resource allocation, and financial performance measurement, this analysis employs established project management techniques, including cost baselining and earned value management (EVM), to provide insights into the project's financial health and guide strategic decision-making.

Background of the Failed Project

The initial attempt at developing an online employee orientation module failed primarily due to inadequate cost estimation, poor scope management, and stakeholder misalignment. Key challenges included underestimating resource requirements, mismanaging vendor contracts, and lack of continuous cost monitoring. These issues resulted in significant budget overruns, delays, and unmet project objectives. A detailed review reveals that the original project budget was approximately $250,000, but actual costs escalated to over $400,000, leading to a project failure and loss of stakeholder confidence.

Current Project Cost Analysis

The failure underscores the necessity for rigorous cost estimation and robust budget control systems. The cost analysis for the current turnaround project begins with revisiting the initial estimates using historical data and proven estimating techniques, such as analogous and parametric estimating. Incorporating stakeholder inputs ensures that the scope is accurately defined, and resource needs are realistically assessed.

The project involves human resources (HR and IT personnel) and contractors, requiring careful allocation of labor hours and understanding their associated costs. The HR team’s estimated effort is projected at 300 hours, while IT resources are estimated at 500 hours, with contracted vendors anticipated to require approximately 200 hours. These estimations are based on scope analysis and previous project experiences, with unit costs derived from market rates and internal salary structures.

For example, HR personnel are estimated to cost $50 per hour, IT staff at $75 per hour, and contractors at $100 per hour. Multiplying the hours by their respective rates yields a preliminary labor cost estimate of:

- HR: 300 hours x $50 = $15,000

- IT: 500 hours x $75 = $37,500

- Contractors: 200 hours x $100 = $20,000

Total estimated labor cost = $72,500

Materials and technology costs are also factored in, including software licenses, development tools, and hardware, estimated at $30,000. Contingency funds are added at 10% of the total estimated costs to buffer against unforeseen expenses, amounting to approximately $10,000.

The aggregate initial budget estimate totals approximately $112,500. This figure is initially conservative but will be refined through iterative cost estimation processes and stakeholder validation.

Establishing the Cost Baseline

Building on the detailed estimates, establishing an accurate cost baseline involves integrating all cost components into a comprehensive budget plan. This baseline serves as a reference point, enabling ongoing performance measurement. It encompasses direct costs (labor, materials, contractors), indirect costs (utilities, administrative support), and contingency reserves.

The use of Earned Value Management (EVM) tools allows tracking of key performance indicators such as Cost Performance Index (CPI) and Schedule Performance Index (SPI). These metrics highlight variances from planned budgets and schedules, facilitating proactive corrective measures.

During project execution, cost control techniques like variance analysis, trend forecasting, and change control procedures are employed. These mechanisms ensure the project remains within approved budgets, reducing the likelihood of repeating previous financial missteps.

Recommendations for Cost Management and Optimization

To ensure project success, ongoing stakeholder engagement is crucial for managing expectations and avoiding scope creep. Applying agile principles can improve flexibility and responsiveness to evolving project needs while maintaining budget discipline.

Regular financial audits and performance reviews should be instituted, backed by real-time data collection and reporting tools. Moreover, establishing a lessons learned repository aids in refining future estimates and avoiding recurring inaccuracies.

Investing in project management training allows team members to develop more accurate estimating skills and enhances the project's overall financial governance. Combining these strategies will maximize resource efficiency, mitigate risks, and enhance stakeholder satisfaction.

Conclusion

Effective cost management is vital for turning around a failed project and ensuring its successful completion. By critically analyzing the initial cost overruns, refining estimates through validated techniques, and establishing a solid cost baseline, project managers can better control expenditures and align project performance with strategic objectives. As evidenced in the Revive LLC case study, disciplined financial oversight, coupled with stakeholder collaboration and adaptive management approaches, provides the foundation for a resilient and successful project turnaround.

References

• Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th ed.). Project Management Institute.
• Kerzner, H. (2017). Project Management: A Systems Approach to Planning, Scheduling, and Controlling (12th ed.). Wiley.