Project Cost and Contract Procurement ManagementBack to Course Guide
The course covers a broad range of cost related uses, ranging from basic budgeting to cost estimating to capital budgeting. It also covers the basic contract and procurement principles. The course prepares students for Scheduling & Cost Controls and Contracting for Project Managers portion of the Project Management Certification test.
UPON COMPLETION OF THE COURSE, THE STUDENT WILL BE COMPETENT IN:
- Defining and discussing life cycle costing and the use of the Work Breakdown Structure (WBS) as a budget tool and basis for estimating target costs.
- Defining and discussing the various terms that are integral to cost management: target cost, target price, definitive estimates, conceptual estimates, preliminary estimates, point of assumption, committed costs, opportunity costs, sunk costs, law of diminishing returns, learning curve theory, parametric estimates, order of magnitude estimates, appropriation, and level of effort work.
- Demonstrating an understanding of how to work various cost-related problems: cost of capital, computing interest rates, and calculating labor costs.
- Understanding the differences between fixed costs and variable costs and how they impact a project’s execution and success.
- Understanding and discussing the various earned value concepts: BCWP, BCWS, ACWP, cost variance, cost performance index, estimate at complete (EAC).
- Understanding and discussing capital budgeting and demonstrating that understanding through working problems related to: net present value, internal rate of return, and payback period analysis.
- Discussing the meaning and use of depreciation of capital and demonstrating knowledge of reading cost tables.
- Discussing capital investment concepts: fixed capital, working capital.
- Discussing various types of contracts important to organizations and how and when they may be used for the benefit of the organization.
- Knowing the legal implications of contracts and understanding the importance of and differences between the various contract terms: Cost Plus Fixed Fee (CPFF), Cost Plus Incentive Fee (CPIF), Fixed Price (FP), and Time and Materials (T&M).
- Demonstrating the ability to analyze the rent versus lease trade-offs and the lease versus purchase advantages and disadvantages.
- Discussing how to analyze “make” versus “buy” decisions.
- Understanding various types of warranties and their importance to the organization.
- Understanding the three basic elements of procurement management (purchasing, expediting, inspection) and how they help the organization meets its objectives.
- Understanding international contract/procurement issues and how they must be understood, negotiated, and executed differently than domestic issues.
- Discussing the benefits of and the differences between centralized and decentralized contracting.
- Understanding the purchasing cycle and how it works within the organization.
- Understanding the principles and importance of Contract negotiation with external parties: suppliers, hardware, software, services, support, etc.