PMI Practice Standard for Project Estimating (2011) and GAO Cost Estimating and Assessment Guide (2009) list several characteristics of good estimating practices. Using this list, comment on each element in the context of estimates prepared by an organization.

TOPIC 2b:

Contingency and Management Reserves

What are contingency and management reserves, and why have they added to the sum of control account or work package estimates in deriving the overall project budget? Discuss the use of contingency and management reserves in an organization. What are the typical magnitudes of these reserves? Who determines the magnitude of these reserves?

Direct and Indirect Costs
Describe the differences between direct and indirect costs. Why must a project manager understand the impact of indirect costs on his/her project? Describe the mechanism for allocating indirect costs allocated to projects in an organization.