"Project and program management is the art and science of planning, controlling and tracking of activities and resources to achieve the organization’s strategic and business objectives."

Project Cost


Project cost is defined as the approximate (estimated) cost of all resources (people, materials and equipment) consumed by the performing organization necessary to achieve the project deliverables.


If a WBS (Work Breakdown Structure) scenario is used to contain information related to resources, estimated effort and activity duration, then, if costs are added to the WBS, it could represent the project cost center. In organizations the administration-finance department will supply an average cost per hour or per day of different types of resources. These rates would represent their average salary rate plus company burden, overhead and profit margins.

In for some reason, it's not possible to post rates against resources (because of company policy), then it's possible to calculate the cost of the project on a person day basis. 

For example: 1 person day = 8 effort-hours = 1 day (8 hours) x 100% (1 person)

In general: Resource Effort (or Work) = Time Elapsed (or Duration) x Percentage of Utilization (or Units)

This cost estimating process will help to verify which portions of the project can be kept in-house versus work that can be farmed out for cost saving measures.

If the WBS is loaded with the cost and the activities scheduled, it's possible to conduct financial time phased analysis (Cash Burn Rate Analysis: that is, measure the rate of negative cash flow (cash going out > cash coming in), over a given period of time). This is important particularly for large projects that require multi year financing.
Published by Bruno Ciano
Start of my discussion on Project and Program ManagementWhy do we need to implement project management?Defining a project
Project behaviour during lifecycleThe differences between Project, Operation and ProgramProject Variables
Project Manager's RoleProject Management Life CycleProject Environment
Project's Organizational Structures - FunctionalProject's Organizational Structures - MatrixProject's Organizational Structures - Team
Visualizing ProcessesStructuring into formsThe Earned Value method to keep track of project performance
TeleworkingProgram ManagementFunctional Analysis
The Needs/Requirements Life CycleUsing PERT for estimating tasksProject Cost
A simple way to software sizing measuresRisk ManagementWork Breakdown Structure (WBS)
WBS & OBS Matrix TableProject Estmating TechniquesProject Cost: building the project resource sheet
Validating The Project EstimateProject Scheduling by MilestonesProject Scheduling by Gantt Charts
Project Scheduling using PDM - Project Network DiagramProject Network Diagram AnalysisProject Opportunities from Cause-Effect Case Analysis
Build and Deploy a Project using OO technologyProject Network Diagram Information and DataA graphical representation of a typical project and product management approach and the relationship throughout their life cycle
A Global PMO Work ModelA Simple Method for Keeping Track of Project Performance using the Earned Value MethodMultiple Projects Performance Analysis using the Earned Value Method
Forecasting Project Costs using Variance AnalysisSizing Applications from User PerspectiveA Metric System for Measuring the Degree of Success of Managed Service Requests
Follow-Up: Estimating using PERT based on Beta Distribution ModelAn approach to a Cost Effective Software SolutionVisualizing the state of projects using geometric figures
A Project Management Method - Graphically