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Lecture Information technology project management (Eighth Edition): Chapter 7

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Lecture Information technology project management (Eighth Edition): Chapter 7, after studying this section will help you understand: Understand the importance of project cost management; Explain basic project cost management principles, concepts, and terms; Describe the process of planning cost management; Discuss different types of cost estimates and methods for preparing them. | Information Technology Project Management Eighth Edition Note See the text itself for full citations. Understand the importance of project cost management Explain basic project cost management principles concepts and terms Describe the process of planning cost management Discuss different types of cost estimates and methods for preparing them Information Technology Project Management Eighth Edition Copyright 2016 2 Understand the processes of determining a budget and preparing a cost estimate for an information technology IT project Understand the benefits of earned value management and project portfolio management to assist in cost control Describe how project management software can assist in project cost management Information Technology Project Management Eighth Edition Copyright 2016 3 IT projects have a poor track record for meeting budget goals A cost overrun is the additional percentage or dollar amount by which actual costs exceed estimates A 2011 Harvard Business Review study reported an average cost overrun of 27 percent. The most important finding was the discovery of a large number of gigantic overages or black swans Information Technology Project Management Eighth Edition Copyright 2016 4 The United Kingdom s National Health Service IT modernization program was called the greatest IT disaster in history with an estimated 26 billion overrun The program had problems due to incompatible systems resistance from physicians and arguments among contractors about who s responsible for what It was finally scrapped in 2011 Information Technology Project Management Eighth Edition Copyright 2016 5 Cost is a resource sacrificed or foregone to achieve a specific objective or something given up in exchange Costs are usually measured in monetary units like dollars Project cost management includes the processes required to ensure that the project is completed within an approved budget Information Technology Project Management Eighth Edition Copyright 2016 6 Planning