COST HOMEWORK

Exercise 5.1 Cost Estimate

Background

This exercise continues your student project that will be used for several homework exercises. The scenario is that you work for the fictitious company: Bear Claw Corporation. You are a project manager assigned to a new project. You are in the defining and planning phases and tasked to produce the project planning documents. This exercise creates a detailed budget.

Directions

Produce a cost estimate for the entire project: direct cost, indirect cost, overhead cost, and cost contingency. Since this is an internal project, profit is not a project consideration.

First, itemize the direct costs, a cost for each task from the WBS. Produce a cost estimate for each task item. It is possible some tasks will have no cost. The cumulative total of all of the task costs is your projects direct cost.

Second, itemize the indirect costs, a cost for activities associated with the project but not found in the WBS. It is possible some projects have no indirect costs. The cumulative total of all of the non-task project costs is your projects indirect cost.

Third, apply an overhead cost, which is the cost of the organization. Calculate the overheard costs for your project, which for Bear Claw Corporation is a 2.5% mark-up to all direct and indirect cost.

Finally, determine a contingency, either at the task or project level, or both. Determine your contingency based on the task and projects cost uncertainty.

Produce a table with your itemized cost, section subtotals, and total cost estimate.