Defines the concept of "project cost management", develops its important elements, and comments on its importance. What is the problem presented in the case study and what implications does it have for the company mentioned in the case? What estimation techniques are discussed in the case? Explain them in detail. What criteria should the project manager use to decide which estimate to use? Conclude the writing by arguing about what is most important, whether to finish the project meeting the objectives set, even if the cost estimates are not met, or whether to meet the costs, even if this represents not meeting any objective. Defend the answer.

Barbara just received the good news: She was assigned as the project manager for a project that her company won as part of competitive bidding. Whenever a re- quest for proposal (RFP) comes into Barbara's company, a committee composed mainly of senior managers reviews the RFP. If the decision is made to bid on the job, the RFP is turned over to the Proposal Department. Part of the Proposal Department is an estimating group that is responsible for estimating all work. If the estimating group has no previous history concerning some of the deliverables or work packages and is unsure about the time and cost for the work, the estimat- ing team will then ask the functional managers for assistance with estimating. Project managers like Barbara do not often participate in the bidding process. Usually, their rst knowledge about the project comes after the contract is awarded to their company and they are assigned as the project manager. Some project managers are highly optimistic and trust the estimates that were submitted in the bid implicitly unless, of course, a signicant span of time has elapsed between the date of submittal of the proposal and the final contract award date. Barbara, however, is somewhat pes- simistic. She believes that accepting the estimates as they were submitted in the pro- posal is like playing Russian roulette. As such, Barbara prefers to review the estimates. One of the most critical work packages in the project was estimated at twelve One of the most critical work packages in the project was estimated at twelve weeks using one grade 7 employee full time. Barbara had performed this task on previ- ous projects and it required one person full time for fourteen weeks. Barbara asked the estimating group how they arrived at this estimate. The estimating group responded that they used the three-point estimate where the optimistic time was four weeks, the most likely time was thirteen weeks, and the pessimistic time was sixteen weeks. Barbara believed that the three-point estimate was way off of the mark. The only way that this work package could ever be completed in four weeks would be for a very small project nowhere near the complexity of Barbara's project. Therefore, the estimating group was not considering any complexity factors when using the three-point estimate. Had the estimating group used the triangular dis- tribution where each of the three estimates had an equal likelihood of occurrence, the nal estimate would have been thirteen weeks. This was closer to the fourteen weeks that Barbara thought the work package would take. While a difference of 1 week seems small, it could have a serious impact on Barbara's project and in- cur penalties for late delivery. Barbara was now still confused and decided to talk to Peter, the employee that was assigned to do this task. Barbara had worked with Peter on previous pro- jects. Peter was a grade 9 employee and considered to be an expert in this work package. As part of the discussions with Barbara, Peter made the following com- ments: Barbara then asked Peter one more question: Peter, you are a grade 9 and considered as the subject matter expert. If a grade 7 had been assigned, as the estimating group had said, how long would it have taken the grade 7 to do the job? \"Probany about 20 weeks or so" responded Peter