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Budgeting and direct cost calculations

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Need assistance on at least a 125 word response for each following question.

1. Why is cost estimation such an important component of project planning? Discuss how it links together with the Work Breakdown Structure and the project schedule.

2. Would you prefer to use the bottom-up or top-down budgeting project cost control? What are the advantages and disadvantages associated with each approach?

Calculate the direct cost of labor for the project team using the following data. What are the costs for the individual project team members? What is the overall direct cost of labor? See Pic attached

4. Calculate the direct cost of labor for a project team member using the following data:
Hourly rate: $65/hour, Hours needed: 160, and Overhead rate: 45%

Assume that overhead is charged on a flat rate basis. Each member of the project is assigned an overhead charge of $300/week. What would be the direct cost of labor for an employee, given that she is assigned to the project for 120 hours at $10.50?

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Solution Preview

Project Management
1. Cost estimation is the first task when managing project. By calculating total cost of the project, it can be ascertained whether project will be profitable or not.
In any project resources are usually limited because of which cost estimation plays a critical role in managing those resources. To be able to correctly estimate cost, project manager needs to list the resources (equipment, material, services & labor) required for the project. Hence, project scheduling is important in cost estimation.
Work breakdown structure help in assigning responsibilities, resource allocation, monitoring and controlling the project. It is used to guide team members on deliverables which are made precisely so that every member knows exactly what has to be done and when it has to be done. It allows for better cost estimation ...

Solution Summary

The advantages and disadvantages of budgeting approaches and calculation of direct costs are determined.