.net barcode reader component 7: Project Cost Management in Software

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7: Project Cost Management
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If managing a budget was easy, anyone could do it After all, it is like balancing your checkbook, right You have a budget, and you have costs and expenses that bleed down the budget In the world of finance, we call this a two-line chart (budget versus actual cost) In the world of project management, you need to be familiar with additional tools and techniques to more effectively estimate, manage, and report progress against your project budget One of the tools for managing cost as a project manager is earned value (EV), which in PMI terms is the value of the work performed I like to call it a three-line chart because EV looks beyond the budget and actual dollars spent EV takes a real look at the work that has been completed and allows you to put that accomplishment into dollars and cents so you can show the true financial health and performance of your project The objective is to give you a better understanding of the benefits of performance tracking as opposed to just looking at the dollars spent Many project managers are either unfamiliar with earned value or simply choose not to use it because it takes some time to incorporate and manage it Another reason PMs shy away from the financial aspects of a project is a lack of a financial background For example, how much finance or accounting experience do you have If not that much, don t worry This chapter provides some easy tips and tricks to help you manage cost on your project and to help you remember the formulas needed to answer the earned value management (EVM) questions on the PMP exam More details are provided on EVM later in this chapter
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There are usually only a few questions (approximately 6 10) on earned value on the PMP and CAPM exams and the formulas are pretty easy to remember
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In 1984 I was invited to interview for a big promotion in Chicago, and the company truly made me an offer I couldn t refuse I accepted the promotion as a Technical Program Manager After the move, and with only one month on the job, my boss came into my office and introduced me to my new manager in the finance department I was stunned and promptly made what could have been a career-limiting announcement: I never, ever wanted to be a bean counter, I declared Well, my boss said, you are one The reason I received this opportunity was because I had personal computer (PC) experience I had, in fact, purchased a PC in 1983, only two years after PCs were introduced in 1981 The one I bought didn t even have a hard drive (only dual floppy 5 " disks) Because I had taken the time (with mentoring from my previous branch
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manager who had said, The PC is the wave of the future! ) to learn how to set up basic spreadsheets and graphs, I was now a Financial Analyst It turns out that getting involved with finance for the company s 26 branch offices and two regional offices in the Chicago area was one of the best things that happened to me It forced me to learn about the world of finance and how to set budgets as well as track and report performance more effectively I also believe this experience helped me manage my projects and my own financials more effectively Thanks, boss
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Of all the stakeholders on a project, the most important is the sponsor I tell my students that when they think of the sponsor, they should visualize a dollar sign as the first letter of the word to help remember who the real customer is and who is funding the project In my Chicago days, I often said, Funding is fun Not that the process is fun, but without funding the project doesn t exist Thus, no funding equals no project, and that is no fun! The project selection process and how projects are born was discussed in 3 Well before the first diaper is purchased for a new project, you need a sponsor Money is what makes the project emerge Someone, somewhere is authorizing the project, and that takes money
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