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03 |Topic 3

How do you kick off design and construction in support of the bond program?

NOTES: C. TRACK EXPENSES AND SCHEDULE

The following listing lays out the four primary steps for project cost
estimating and tracking:

Step #1 - Make the contingency decision.
Contingency budget decisions should be made at the start of the budget
estimating process. Will you need a contingency budget? If so, in what
amount, and how will it be used?

Step #2 - Identify the cost factors.
While cost factors will vary based on project characteristics and business
circumstances, in general, project costs can be viewed from four basic
perspectives – labor, capital investments, overhead (to maintain the
project environment) and project specific (costs to plan, manage and
execute the project).

Step #3 - Establish cost factor values.
Project budgets quantify the expected costs associated with a project.
These budgets must be based on a reasonable, realistic estimate of likely
project costs and expenses. The estimation of project costs is made up of
four key parts: science, intuition, common sense and experience.

In fact, past projects can be the most valuable indicator of current project
expenses. As project costs are estimated, the following factors should be
considered:

 The specific cost factors involved depending on the needs of the
project.
 The costs of similar projects in the past.
 The opinions and feedback of project participants. When estimating
costs, it is important to get a broad spectrum of information,
experience, and opinion.

Step #4 - Track expenditures and variances.
Once the project budget is created and approved, and the project is
underway, costs and expenses must be tracked to ensure that budget
utilization is as planned and expected (are you spending what you expected

to spend based on how the project is proceeding?).

MAY 2017 RICE & GARDNER | 15
PROGRAM MANAGEMENT | GUIDE BOOK