9.6 Exercise Read the following case study and review the table to see some examples of what the project manager will do during each of the Cost Management processes.

The city council reviewed a high-level recommendation for the new library (considered the charter for this project).

The project manager (PM) reviews the recommendation to plan and develop a more detailed cost estimate along with a schedule.

• The (PM) knows that talking with the architect and construction team leader will help formulate cost estimates.

• Understanding the size and interest rate of the debt will factor into needed funds and scheduling urgency.

• Talking with the mayor will determine how and when to effectively report progress against the budget as the mayor will have final signoff on the budget.

• The PM will ask for clarity on spending authorizations and change orders.

• Reviewing results from the city’s last building project will provide insights into costs, risks, and potential resources.

• The city manager will help with reviewing and controlling the budget, as this manager will be responsible for project procurement.

• To track costs, the PM will use the city’s financial reporting system, recording all expenditures within a month of their paid dates.

• The PM will create monthly financial reports of expenditures and earned value.

• Any unexpected costs or change orders, over the city authorization policy covering the PM, must be approved by the city manager or mayor.

Cost Process Examples of the PM’s work Plan cost management

• Plan to talk with architect and head of construction about costs

• Plan to talk with major about frequency of reporting expenditures

• Review the lessons learned from the prior city building project

• Review the expected debt amount with associated interest payments

• Learn about PM’s authority for expenditures and changes to budget

• Get access to city financial system Estimate costs • Talk with involved stakeholders; review price estimates of needed resources

• Get estimates for several completion dates to compare the time vs. cost considerations Determine budget • Present two different budget options to the city council for approval, answer questions as needed.

• After council budget selection, prepare the final budget and schedule for the city manager to review. Adjust as needed and get signoff.

Control costs • Enter expenditures into city financial system within one month of payments.

• Monthly reporting of total expenditures, including earned value analysis.

• Extra expenditures over PM authorization must be approved by mayor or manager.