An integrated delivery model must take into account all technical, resource and financial constraints.
Full integration between project time and cost must include all expenses assigned to project activities, resources and time-driven tasks.
As each project is unique, it may require different cost components like: labour, materials, machinery, licensing, indirect cost, penalties, cost of delay, contract costs and many others.
- It is not sufficient enough to just have a single cost category. It is essential to manage and analyse project costs from different perspectives. So, cost components must be defined and set up based on project nature.
- Additionally, to expense costs, a project can have contract costs, and in many cases, it is necessary to create and manage several budgets for the same project.
Therefore, it is necessary to define these elements as individual cost components that can be used for project budgeting, project performance and risk analysis.
Different projects may require managing cost elements in different ways:
- Activity costs can be defined as fixed, cost per volume unit, and cost per work hour;
- Renewable resource cost can be defined as cost per hour;
- Consumable resource cost can be defined as cost per unit;
- Resource assignment cost can also be fixed or defined as cost per work volume unit and hour;
- Indirect costs usually depend on project duration, and they are assigned on the Level of Effort or Hammock activities. It is usual practice to calculate them as the percentage of some cost components.
The cost of time must also become a part of the project model. Usually, project cost rises when the finish is delayed or drops with the schedule acceleration.
Cost and Schedule Integration
Proper cost and schedule integration require:
- Project delivery plan to be built based on volumes of work, resource productivities, resource availability, material supply and funding constraints.
- Project cost loaded based on the relevant cost components.
Only then a project delivery model has a full and reliable cost and schedule integration.
The application of this approach can significantly improve project management culture and increase the number of successful project implementations.
Spider Project allows full integration of time and cost. The project team can set up all necessary cost elements in all possible ways.
See how cost & schedule integration works in Spider Project: