Budgeting

How many work weeks are in the project timeline, where work will actually occur? The project timeline runs from 1 January 2017 to 31 March 2018. This implies that there are 65 weeks in total within this period. However, taking into consideration that there are three weeks for vacation, the number of weeks in the project timeline where work will actually occur is 62 weeks. How much money does the team cost per hour? There are 10 managers. The manager salary for an hour is $100. Therefore, the cost for managers per hour is $100 x 10 = $1,000.

There are 100 programmers and staff. Their rate per hour is $35 per hour. Therefore, the cost for programmers and staff is $35 x 100 = $3,500. This implies that the team costs $4,500 per hour. How much money does the team cost per week? Every week contains forty working hours. Taking into account that the cost per hour is $4,500, the total cost per week is $4,500 x40 = $180,000. How much money does the team cost for the duration of the IT project? The total cost incurred for the team for a week is $180,000.

The total number of weeks for the IT period is 62 weeks. Therefore, the total team cost for the duration of the IT project is $180,000 x 62 = $11,160,000. Remembering that maintenance is amortized, that payments begin during the first month of the project, and that all other system costs are assigned to the project, what is the total systems cost through the timeline completion on 31 March 2018? Amortization takes into account the disseminating payments over a particular time in multiple periods.

These payments that are spread out are equally paid out in the various payment periods (Deegan, 2013; Riahi-Belkaoui, 2004). The system maintenance is amortized through a five-year period and the total cost is $5.0 million. This implies that for every year, the amortization cost is $1.0 million. The total timeline period is 62 weeks and this is equivalent to 1 year and 2.5 months. Taking into consideration that 1 year = 12 months, 2.5 months will have an amortization cost of 2.5/ 12 x 1.0 million = 0.2083 million. Therefore, the total amortization cost for the IT project timeline will be 1.2083 million.

The other system costs include systems planning cost of $100,000, systems development cost of $1,400,000 and system fielding cost of $300,000. Therefore, the total system cost is calculated as follows: Cost $ million System maintenance 1.2083 Systems planning cost 0.1 Systems development cost 1.4 System fielding cost 0.3 Total system cost 3.0083 The total system cost is 3.0083 million. Rounded up, the total cost is $3 million. What is the total project cost through completion on 31 March 2018? The total system cost as obtained above is $3.0083 million. The total team cost is $11.16 million.

The total project cost includes both the system cost and the team cost. Therefore, the total project cost Cost $ million Team Cost 11.16 System maintenance 1.2083 Systems planning cost 0.1 Systems development cost 1.4 System fielding cost 0.3 Total project cost 14.1683 The total project cost is 14.1683 million. Rounded up, the total cost is $14 million.

After project completion on 31 March 2018, what will be the remainder cost for maintenance that will still need to be budgeted and managed? Subsequent to the completion of the project on 31 March 2018, the total amortization cost for the IT project timeline will be 1.2083 million. The total amortization over the course of the five-year period is $5.0 million. Therefore, the remainder cost for maintenance that will still need to be budgeted and managed is $5.0 million - $1.2083 = $3.7917 Therefore, the total remaining cost will be $397,170.

Forecasting a budget with no strategic reserve, what should the project cost per month be for the budget during the project timeline? In delineation, strategic reserve is reserving of an item that is controlled or restrained from pursuing a certain strategy so as to deal with unexpected and unanticipated events. Therefore, devoid of any strategic reserve, the total project cost will be similar. As calculated above, the total cost of the project is $14.1683 million for 15 months.

Therefore, the project cost per month for the budget during the project timeline is calculated as follows: = 14.1683 / 15 = $0.94456 million Therefore, rounded up the total cost for every month is $944,553. With the addition of a 10% strategic reserve, what should the project cost per month be for the budget during the project timeline? As pointed out, if the strategic reserve is in fact applied, it is only applicable to the maintenance costs in the course of the timeframe of the timeline.

On the other hand, maintenance costs that surpass and go beyond the timeline have been negotiated as a firm fixed priced contract and do not necessitate the use of strategic reserve on top of the negotiated price. Therefore, in this case, the 10% strategic reserve is applicable to the period between 1 Jan 2017 and 31 March 2018. The total timeline period is 62 weeks and this is equivalent to 1 year and 2.5 months. Taking into consideration that 1 year = 12 months, 2.5 months will have an amortization cost of 2.5/ 12 x 1.0 million = 0.2083 million.

Therefore, the total amortization cost for the IT project timeline will be 1.2083 million. However, applying the 10% strategic reserve, the maintenance cost increases to 1.1 x 1.2083 = $1.32913 million.

Therefore, the total cost of the project increases to Cost $ million Team Cost 11.16 System maintenance 1.32913 Systems planning cost 0.1 Systems development cost 1.4 System fielding cost 0.3 Total system cost 14.28913 Therefore, the total cost increases to $14.28913 The total cost for every month therefore becomes $0.95260866 This implies the cost for every month will be $952,609 Considering that you decide to budget using the strategic reserve, and you need to budget for the entire maintenance cost, what is the total amount of capital you will need to raise to complete the project successfully during the timeline and then maintain the system through the full 5-year maintenance contract, noting that the first month of maintenance for the contract starts simultaneously with the start of the project? If the decision is made for the budgeting to be undertaken using the strategic reserve and budgeting done for the whole maintenance cost, it implies that the initial cost of $5.0 million that was considered before increases.

Taking into consideration that the strategic reserve has an addition of 10%, then the cost increases as follows: 1.1 x 5.0 million = 5.5 million cost with respect to the maintenance cost. Therefore, the total amount of capital that will be necessitated to be raised so as to finish the project fruitfully in the course of the timeline and then preserve the system throughout the full 5-year maintenance contract is calculated as follows: Cost $.