3 pm3 c_1%20-%20developing%20the%20cost%20plan
TRANSCRIPT
Slide 1
Acceptance and FlowdownA formal acceptance is signed by an authorized representative (usually the project manager or contracts)this must be flowed down internally in order to authorize project work via an internal purchase, sales or work order comprising:Statement of Work for authorized amount = Contract SOW (CSOW)Contract Price which forms the Contract Price used to derive the eventual budget (Week 4)Eventually, these contractual requirements will be reflected in the project planning documents through to the lowest levelControl Accounts will be set up to contain the budgetted Contract price (Cost Planning)Issues project work orders to flow down the authorized scope (Scope Planning)
#3PM3_T_B Planning TimeThe Contract drives the ProjectProject work is driven by some form of ContractFormal contracts are usually established with external customersInformal contracts are/should be established with internal customers, and may simply be memos, work orders, or an e-mailThese Contracts evolve into the top level program instructions through a process that involves:Reviewing the proposed contract requirementsPreparing a responseNegotiating and accepting the final contractFlowing down the final contract into the projectAt each step, the contract contains two distinct elements:The work to be performed, or ScopeThe resources (funds, equipment, staff) to be provided to pay for performance and profit
674-2435
NContract Negotiations
ContractContractReview/ProposalCostEstimateContractSOWContractPrice/ProgramBudgetControlAccountsProgramWorkOrder
ScopeFlowdownFundingFlowdown
Scope Planning
#3PM3_T_B Planning TimeThe Contract drives the ProjectProject work is driven by some form of ContractFormal contracts are usually established with external customersInformal contracts are/should be established with internal customers, and may simply be memos, work orders, or an e-mailThese Contracts evolve into the top level program instructions through a process that involves:Reviewing the proposed contract requirementsPreparing a responseNegotiating and accepting the final contractFlowing down the final contract into the projectAt each step, the contract contains two distinct elements:The work to be performed, or ScopeThe resources (funds, equipment, staff) to be provided to pay for performance and profit
674-2435
NContract Negotiations
ContractContractReview/ProposalCostEstimateContractSOWContractPrice/ProgramBudgetControlAccountsProgramWorkOrder
ScopeFlowdownFundingFlowdown
Cost Planning
#3PM3_T_B Planning Time?
Scope PlanningCost Planning
#3PM3_T_B Planning Time?
Scope PlanningCost PlanningCost Planning = Matching authorized funds with authorized work to make things happen$
#3PM3_T_B Planning Time
Distributed Budget
Basis ofEstimate(BOE)
Work Order
Control Accounts
WorkBreakdownStructure
#3PM3_T_B Planning Time
Distributed Budget
Basis ofEstimate(BOE)
Control Accounts
A cost estimate is prepared.The estimate is converted into a project budget, usually through contract negotiation.The budget is divided into control accounts.The control account budgets are distributed to fund the scope which has been assigned to Work Packages to create the distributed budget
ProjectBudget
Cost Estimating
#3PM3_T_B Planning Time
Distributed Budget
Basis ofEstimate(BOE)
Control Accounts
A cost estimate is prepared.The estimate is converted into a project budget, usually through contract negotiation.The budget is divided into control accounts.The control account budgets are distributed to Work Packages to create the distributed budget
ProjectBudget
Cost EstimatingCost BudgettingHow do we know which Work Packages to distribute the budgets to?
#3PM3_T_B Planning Time
Closing the Loop between Work and Funding 5.The WBS is used to define both the Control Accounts and the Work Packages being authorized.
Because of this common link, funds in the distributed budget line up with Work Packages, so that
Budget and Work Packages may be connected and used to authorize work through a Work Order form
Work Authorization
Cost EstimationCost Budgetting
#3PM3_T_B Planning Time