Knowledge Audit

PROJECT COST MANAGEMENT

ITPM TCB3073

MUHAMAD AZLAN ABDUL HALIM SHAKHNOZA KHAMDAMOVA

BACHELOR OF TCHNOLOGY (HONS) BUSINESS INFORMATION SYSTEMS, MAJORING IN KNOWLEDGE MANAGEMENT

Chapter 7: Project Cost Management

1. Discuss why many information technology professionals may overlook project cost management and how this might affect completing projects within budget. Cost management within an information technology project is probably one of the most difficult tasks an organization will encounter. Estimating the various costs that go into an IT project is extremely difficult to do from the start. This is an important factor to consider when analysing the success of cost management practices on a particular project, because final costs are measured against the initial estimates. Unfortunately, it is likely that this estimation/budgeting difficulty is what causes many IT professionals to (as the book used) “smirk” at the idea of project cost management and/or cost overruns. In other words: effective IT project cost management is pretty much impossible, so why bother. One of the biggest reasons IT professionals have trouble with cost management is because many IT projects have very vague or undefined requirements initially. For example, almost every software project is unique example mobile app for a bank, so there is no clear path on which to formulate project costs. This initial lack of detail often results in underestimated development costs, which are quickly surpassed when multiple issues arise due to various factors such hardware incompatibility, expanding scope and others. Not conducting a detailed requirements analysis almost always results projects going over budget, because IT projects are rarely as simple as initially thought.

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