Rationale of Cost and Time Estimate
During project planning, the project schedule as well as cost estimate are accepted. These will make the planning of the project’s work complete. At this point, one can start doing the work. Formally, this is termed as project execution and control. Consequently, execution refers to doing the work while control refers to tracking the work and ensuring that it is being done on time as well as within budget. The process of tracking completed work, which refers to scope deliverables against cost and time, is referred to as Earned Value Analysis. The purpose of performing Earned Value Analysis is to ensure that there is delivery within budget. In addition, the estimation of Earned Value Analysis helps in learning whether a good job was done in cost and time estimate. There are two important reasons for tracking actual cost and time as the project is being worked on. First, the data obtained is very essential input for future estimates. Secondly, this makes it possible to compare the actual cost and estimated costs at the end of the project, day by day, line by line and the planned schedule to the actual schedule.
Project Budget Determination
|Cost Element |Activity |Cost Estimate ($ Millions) |
|Port Design |Electrical Requirements |4 |
| |Structural Requirements |3.5 |
| |Mechanical Requirements |4.5 |
|System Design |Hardware |1.5 |
| |Software |1.0 |
|Project management | |5...