The project is progressing well, and you have now been asked if there is enough time and budget to provide and distribute a new marketing mailing. This mailing will be focused on a new international marketplace, so the existing materials cannot be used as is. The materials will need to be translated (external resource), have different graphics applied, and use different colors.

The cost for mailing internationally is twice the cost of the domestic mailing, and the volume is 200,000-250,000 addresses. A mailing list will be purchased for this mailingbecause it is a new market for the company.

You need to determine the costs of this mailing (internal and external). You also need to determine the resource requirements and identify any conflicts. Jennifer and you have a working session later this week to pull together the information.

• In preparation for the meeting, design a worksheet (in Excel or another spreadsheet tool) that you can use to design the budget for the new mailing.
• Pre populate the worksheet with the components of the estimate, and provide directions to Jennifer in a procedures document (in Word) on how to provide a three-point estimate for the resulting budget.
• Be sure to also include the internal costs.
• Also, design a schedule that identifies the deliverables, activities, and resources to produce this mailing.
• Justify your choices.

Please refer material(s):

• Cost Methods
• Project Estimation, Budgeting, Cost

I have provided a template for you to use. Please us this as template as directed.

Cost Categories: Domestic

Cost Total Needed Final Cost

Graphic Design Firm

New Domestic Mailers - 5 colors

Mailing Direct Costs

Domestic Mailing List

Domestic Mailing Cost

Supplies

Labor

Staff Hours

Consultants, Contractors & Temp. staff

Other Expenditures

Project Equipment

Contingency

General Overheads

Cost Categories: International

Cost Total Needed Final Cost

Mailing Direct Costs

International Mailing List

International Mailing Cost

Supplies

Labor

Staff Hours

Other Expenditures

Project Equipment

Contingency

General Overheads

(Cost Methods)

Top-Down Modeling

Several different techniques and methods exist for creating a project estimate. The estimate is dependent upon the size and complexity of your project, along with your organization's culture toward estimating. A commonly used method is analogous estimating (top-down estimating). This form of estimating uses the actual results from a similar, finished task to determine the cost of the current task. Software projects may use a method calledfunction point analysisto develop the cost estimates; it calculates an estimate based on the number of inputs, outputs, and other project characteristics. Other methods include the Delphi method (a group approach using experience to provide estimates) and the COCOMO (constructed cost model) method developed by Barry Boehm.

Parametric Modeling

Parametric modeling is a technique that uses cost-estimating relationships (CERs) that make use of product characteristics (such as development time) to estimate costs and schedules. Using historical information, a model is created that uses key criteria (complexity, number of sites, number of hours of training, etc.) as a basis of estimating. Completed projects help determine where the product characteristics, project schedules, and costs are known. Then, the project team can determine how much a particular task will cost. Add up all the tasks, and the project budget can be determined. For example, an organization that develops instructor-led training may have a historical cost-estimating relationship that defines the number of hours of development work for each hour of training.

Bottom-up Estimating

Bottom-up estimating is the technique of preparing a budget by looking at each and every task involved in the project. An estimation of how much effort each task will be notated and the totals will determine the project budget. With accurate estimates, this can be an extremely thorough means of estimating. The downside to this estimating technique is that it takes a very long time to go through every task. This type should be used by the beginning to intermediate project manager. Similar types of projects can use the top-down plan, in which you have a general idea of what each phase will cost, and you can budget accordingly. Otherwise, you can make your own parametric models based on your own experiences.

Rough Order of Magnitude Estimate

The rough order of magnitude (ROM) could also be called the ballpark figure. It is a high-level estimate, usually given as a range based on preliminary information and a large number of assumptions. This type of estimate is known as an assumption and is typically used to determine the scope and feasibility of a project. In many cases, this type of estimate is used as input to a budgeting cycle, and when the project is approved, a more accurate, detailed estimating method is used.

Contingencies

Contingency is the amount of cushion you build into your project estimate to ensure that scope changes and cost overruns can be absorbed. The importance of adding contingency to the project is so that the project manager has some flexibility to adapt to changes. Contingency can also cover errors and inaccuracies in project estimating. A project that uses an ROM estimate as opposed to a parametric model estimate will likely need a higher amount of contingency to cover the variability in the ROM estimate. A best practice is to add contingency as a single line item in the project budget as opposed to adding a specific percentage to each line item. There is no standard percentage for contingencythe project manager should apply what they know from their own experience or use what is the standard accepted by the organization.

(Project Estimation, Budget, Cost)

Preparing a Project Plan

Generative Learning Support (GLS) script

Activity 1 - Project Plan Elements

As a project manager for a company specializing in the wiring and installation of fire alarms, you have been asked to design a project plan, including a project schedule and project budget estimate, for your current project of installing fire alarms for a new office building.

Select each project plan element with the appropriate description.

Question 1:Which of the following project plan elements is a short summary of the objectives and scope of the project?

A. Schedules

B. Overview

C. Resources

The correct answer is: B. Overview.

Feedback for the other selections is as follows:

• Schedulesis a list of all milestone events, tasks, and estimated times to complete tasks.
• Resourcesis a description of cost monitoring and control procedures.

Question 2:Which of the following project plan elements is a list of potential problems and potential lucky breaks affecting projects?

A. General approach

B. Risk management plans

The correct answer is: B. Risk management plans.

Feedback for the other selection is as follows:

• Thegeneral approachis a description of managerial and technical approaches to the work.

Activity 2 - Determining the Expected Completion Time for an Activity

You are to determine the cost of the fire alarm wiring for your current fire alarm project. Three-point estimation is used to determine the activity completion time. Expected completion times use three time estimatesoptimistic, pessimistic, and most likely.

Question 3:What is the correct order of the missing elements in the following formula for activity completion time estimate?

Cost = (Element one) + 4(Element two) + (Element three) / 6

A. optimistic, most likely, and pessimistic

B. pessimistic, optimistic, and most likely

C. most likely, pessimistic, and optimistic

The correct answer is: A. optimistic, most likely, and pessimistic.

The correct formula reads: Cost = (optimistic) + 4(most likely) + (pessimistic) / 6.

Activity 3 -Budget Estimating for Costs of Projects

Three types of budget estimating are used in estimating the costs of projects. These are the ballpark estimate, the top-down estimate, and the bottom-up estimate. Each type has its own advantages and disadvantages. Determine the correct characteristics of each type of budget estimating. Drag the correct characteristics to each type of budget estimating.

Question 4:Which of the following budget estimating methods has this characteristic: Range of variance is from -25% to +75%?

A. Top-down

B. Ballpark

C. Bottom-up

The correct answer is: B. Ballpark.

Question 5:Which of the following budget estimating methods has this characteristic: Range of variance is from -10% to +25%?

A. Top-down

B. Ballpark

C. Bottom-up

The correct answer is: A. Top-down.

Question 6:True or False: The bottom-up project cost estimation method is the most accurate.

A. True

B. False

The correct answer is: A. True.

Thebottom-up estimation methodis the most accurate type, but it requires the most time to create. Work breakdown structure (WBS) is used to account for the cost of each deliverable.

Question 7:Which of the following is considered the earned value of work accomplished?

A. Budgeted cost for work scheduled (BCWS)

B. Actual cost of work performed (ACWP)

C. Budgeted cost of work performed (BCWP)

D. None of the above

The correct answer is: A. Budgeted cost for work scheduled (BCWS).

Question 8:What are three purposes of earned value analysis (EVA)? Formulate your response and then review the model answer.

The model answer is: Three purposes of EVA are the following:

• Measuring a project's performance
• Predicting a completion date
• Providing project cost schedule and budget variances