Homework

PMM-190 Week 4 Day 1 Assignment Adam Snellenberger

Discussion Questions

Question 1. Discuss why many IT professionals may overlook project cost management and how this might affect the ability to complete projects within budget.

Answer. Nowadays, IT professionals are much more concerned with finishing the project than dealing with its cost implications which they think are more of an accountant's work. Furthermore, IT professionals are openly accepting the fact that cost overruns are natural for a project. The cost of the project can overrun and the cost of the project will exceed the estimate cost of the project.

Question 2. Explain some of the basic principles of cost management, such as profits, life cycle costs, tangible and intangible costs and benefits, direct and indirect costs, and reserves.

Answer. Cost management involves the processes necessary to ensure a project team completes a project within an approved budget. Costs managing includes profits, which are revenues after subtracting expenses. The life cycle costs, includes total cost of ownership or development, plus project support costs. Costs or benefits are tangible, when they are easily measured in dollars. The intangible costs and benefits are difficult to quantify in monetary terms, such as goodwill, prestige, or statements of improved productivity. Direct costs are directly related to producing the products and services of the project at hand, while indirect costs are indirectly related to performing of the project, such as electricity, and paper towels. Reserves are dollars included in a cost estimate to provide a cushion for future situations that are difficult to predict.

Question 3. What is meant by a sunk cost? Give examples of typical sunk costs for an IT project as well as examples from your personal life. Why is it difficult for people to ignore them when they should?

Answer. A cost that has already been incurred and thus cannot be recovered. The example of a sunk cost from my...