MGMT $6200$ Project Management

Cost Estimation & Budgeting

General Objective

Apply the main cost estimating and budgeting techniques to a case study.

Specific Objectives

$$ Estimate an activity cost.

$$ Determine what estimation techniques are being used.

$$ Calculate contingency reserves.

$$ Calculate management reserves.

$$ Calculate the cost baseline.

$$ Calculate the project budget.

Case Description

The Gaucho Grill Website

Background

The Gaucho Grill is one of the most traditional grills in Montevideo. It is internationally recognized for the quality of its meat cuts, for its tradition, and for the variety of wines that are available. This restaurant serves the best traditional food in Uruguay, and because of that, it is considered one of the best dining places in the capital.

Since its opening, hundreds of tourists have made a mandatory stop at the Gaucho Grill tables and enjoyed its great dishes. In recent times, the restaurant has adapted to the newest culture, seeking modernization, by focusing on client services without leaving behind its great gastronomical tradition.

Project Description

The new management wants to offer their clients added value beyond their delicious dishes. They have identified website development as one of the priority projects in their yearly plan. Through the website, they look forward to interacting with their clients and bringing them into social networks, allowing them to add recommendations for dishes and share their experiences when they visit the restaurant. Additionally, by using the website, it is expected that the clients will be able to look for discounts and promotions and make reservations. The management wants to know their clients better by developing a database to capture client feedback, including complaints.

Project Manager

The general manager $($sponsor$)$ has delegated the client service manager to assist with the project management. The PM has hired a consulting firm specializing in designing and developing websites to execute the project.

Current Status

The client service manager is working on the project$$s detailed budget, which must be presented to the sponsor for approval.

$$

Work Breakdown Structure

The WBS is shown below. Its high$-$level structure is as follows:

$1\mathrm{.}1$ Design

$1\mathrm{.}2$ Development

$1\mathrm{.}3$ Quality Assurance

$1\mathrm{.}4$ Training

$1\mathrm{.}5$ Implementation

Cost Table $($Work Packages$)$

Based on the WBS$,$ the costs for work packages have been identified in Table $1.$

Table $1$ Cost Table $($all costs in US Dollars$)$

Code Description Cost

$1\mathrm{.}1\mathrm{.}1\mathrm{.}1$ Functional Specifications $$250\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}1\mathrm{.}2$ Technical Specifications $$255\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}2\mathrm{.}1$ Logical Structure $$500\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}2\mathrm{.}2$ Physical Structure $$350\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}3\mathrm{.}1$ Technical Specifications $$250\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}3\mathrm{.}2$ Interface Proposals $$200\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}4\mathrm{.}1$ Functional Specifications $$375\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}4\mathrm{.}2$ Technical Specifications $$325\mathrm{.}00$

$1\mathrm{.}1\mathrm{.}4\mathrm{.}3$ Reports Proposal $$300\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}1\mathrm{.}1$ Design Review $$355\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}1\mathrm{.}2$ Coding $$2,750\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}2\mathrm{.}1$ Design Review $$325\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}2\mathrm{.}2$ Coding $$3,300\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}3\mathrm{.}1$ Design Review $$375\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}3\mathrm{.}2$ Coding $$2,575\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}4\mathrm{.}1$ Design Review $$325\mathrm{.}00$

$1\mathrm{.}2\mathrm{.}4\mathrm{.}2$ Coding $$2,450\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}1\mathrm{.}1$ Specifications Testing $$225\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}1\mathrm{.}2$ Integration Testing $$425\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}2\mathrm{.}1$ Specifications Testing $$275\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}2\mathrm{.}2$ Integration Testing $$435\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}3\mathrm{.}1$ Specifications Testing $$245\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}3\mathrm{.}2$ Integration Testing $$410\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}4\mathrm{.}1$ Specifications Testing $$250\mathrm{.}00$

$1\mathrm{.}3\mathrm{.}4\mathrm{.}2$ Integration Testing $$425\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}1\mathrm{.}1$ Specifications Testing $$1250\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}1\mathrm{.}2$ Flow Diagrams $$1500\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}1\mathrm{.}3$ User Manual To Be Determined

$1\mathrm{.}4\mathrm{.}2\mathrm{.}1$ Methodology $$425\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}2\mathrm{.}2$ Materials $$1250\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}2\mathrm{.}3$ Help Menu $$500\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}3\mathrm{.}1$ Formers Formation $$800\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}3\mathrm{.}2$ Support Team $$375\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}3\mathrm{.}3$ Potential Users $$2000\mathrm{.}00$

$1\mathrm{.}4\mathrm{.}3\mathrm{.}4$ Final Users $$550\mathrm{.}00$

Code Description Cost

$1\mathrm{.}5\mathrm{.}1\mathrm{.}1$ Providers Selection $$200\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}1\mathrm{.}2$ Hardware Buy $$7500\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}2\mathrm{.}1$ Providers Selection $$250\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}2\mathrm{.}2$ Software and Hosting Buy $$7000\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}3\mathrm{.}1$ Implementation Plan $$800\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}3\mathrm{.}2$ Recruiting the Work Team $$450\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}3\mathrm{.}3$ Implementation Components $$200\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}4\mathrm{.}1$ Software$-$Hardware Integration $$400\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}4\mathrm{.}2$ Applications Installation $$400\mathrm{.}00$

$1\mathrm{.}5\mathrm{.}4\mathrm{.}3$ System Transfer to End Users $$1500\mathrm{.}00$

As shown in Table $1,$ the user manual work package cost estimation is still pending $($to be defined$).$ The details of the activities comprised in this work package are as follows:

Write the Document Activity

According to the consulting firm, specialists create the main contents of the documents by documenting the technical specifications and the flow diagrams in the previous work packages. There are templates available for document development. According to other experiences where they counseled restaurants in Buenos Aires, Argentina, which consisted of developing websites with similar concepts, they estimate that one person can do this activity in three workdays. The daily cost for that person in Uruguay pesos is about $U