Cost and Quality Management Plan

1. Cost Management Plan

The purpose of this cost management plan is to present the overall approach for project cost management which was adopted for the vehicle maintenance facility project. The plan highlights the specific processes, tools and techniques which were utilized to establish the project cost estimate and a project budget baseline. In conclusion, the plan also presents a justification for the budget, highlighting why the proposed budget is suitable to successfully steer the project towards its conclusion. 

• Project Cost Management Approach and Processes

The first step which was undertaken to develop this plan was associated with engaging in resource planning. According to Ray (2012), resource planning is essentially the starting point of a project cost management plan because it provides project managers with a clear perspective of the resources which are required to initiate the project and conclude it successfully, in line with the project goals. For the purpose of this plan, a work break down structure was adopted to define the project precisely and its deliverables precisely. The sub-tasks within the project were categorized in terms of their importance. This assisted in the identification of project elements which were accounting for the maximum part of the budget in comparison with components that did not require significant expenditure.  

The next important mechanism which is a part of the cost management plan pertains to establishing controls that are pertinent to cost reporting. In this particular cost management plan, the estimated budget for the items listed below was ascertained in order to ensure that it could be gauged against actual costs for determination of variances. The items included in the budget are as follows:

• Initial Contract-Related Costs for the Project
• Initial Site Work
• Foundation
• Structure and Envelope
• Office Interiors
• Final Site Work
• Closeout of Project

This cost management plan is largely based on a processed based approach. In order to ensure that the project remains on track and is characterized by the presence of effective monitoring, control and evaluation, the cost variances identified during the course of the project will be reported to the project administrator and senior management. An important component of the cost management plan is the control threshold which is the level of tolerance that the project can bear with reference to actual and budgeted costs (Sanghera, 2008). With regard to the Vehicle Maintenance Facility project the prescribed control threshold is 10%, such that if the actual cost exceeds the budgeted cost by this proportion then the project would be deemed as ‘out of control’. If the project reaches this stage, the project team will develop a revised cost schedule which will be devised in close coordination with the senior management. 

• Project Cost Estimation Tools and Techniques

According to Heldman (2018), there are various techniques and tools which can be utilized to perform cost estimation which include vendor bid analysis and establishing the rates of resources. The process of cost estimation is largely based on predicting resource requirements and allocating costs to these resources by taking into account both the risks and trade-offs of forecasting these costs. The cost estimation presented in this plan is based on determining resource rates by engaging in primary and secondary research. Primary research in this case includes approaching vendors to acquire resource rates by asking for quote submissions whereas secondary research maybe undertaken through the Internet. Additionally, resource rates can also be determined internally from the organization. For example, rates of human resources and materials procured from certain verified suppliers may assist in gauging the market average. The project manager will ensure that all supporting documents, research and evidences for each of these resource costs is stored so that any changes to the cost management plan can take place by reviewing the initial sources.