Question:
1. Briefly describe the “critical path”. Be sure to explain how and why this critical path is important.
2. Describe the budgeting process used for your chosen project.
Did you use program, top-down or bottom-up budgeting?
Who was involved with the budgeting process
How was the cost estimate done?
What are the steps to reduce costs?
What can be done to reduce costs?
3. Compare and contrast the benefits and disadvantages of both top-down budgeting and bottom-up.
4. Compare and contrast the various budget and schedule estimation tools and techniques that are available to project managers.
5.What should you estimate first? Budget or schedule?
Answer:
1.Critical Path is a set of activities that have zero slack. It determines the project’s overall duration (thebalance 2016, 2016).
Critical path activities cannot be delayed for more than one day.
How to determine the Critical Path: Each activity in a Schedule has below shown
Information such as its name or ID of the activity, and duration.
Moving forward, add the duration of each activity to its early start date. This will produce an early end date. However, the early finish date plus one will give us the early start of the successor activity. Again, we can add the duration of the successor activity with its early start date to produce the early finish date. We also need to calculate the entire chain of activities up until the last activity.
We can now go backwards, and subtract the length from the late finish date to get the late start date.
The late start date for the successor activity is reduced by one day. Subtracting the duration from the late finish date will produce a late start date.
Continue this process until the next activity in the chain.
This will give us the dates for each activity’s early, late, late, and early finis.
The critical activities are those in which there is no difference between late finish or early finish, late start or early start, and these activities are called critical paths.
This calculation is crucial because it determines the duration of any project. It also gives information about the most important activity that we should concentrate on among the many activities in complex projects.
Let’s say that my project is to create a project charter to be approved by the sponsors for the project to begin.
The top-down estimation method is used by project managers to determine the budget. This can be done using previous experience or consulting with an experienced consultant.
The budgeting process is the way that all organizations prepare their budget.
The direct, indirect, and administrative costs of estimating the cost are identified and added up (dummies 2017, 2017).
These costs can be estimated using historical data or past project experience, expert feedback, etc.
Controlling cost is possible by following the steps below.
These steps include proper planning to reduce cost. By using past experiences and learnings, communicating the plan to employees can help them be more aware of their job requirements and motivate them. A proper analysis of the current cost performance can also help all stakeholders to make the right decisions to control it. Finally, the final authority, which is the top management, must take the appropriate actions based on the performance to control project costs (AccountLearning, 2017).
3.Top-down Budgeting: This is where the top management creates a budget figure. It then passes down to the departments and each section for finalizing their budget figures.
Advantages
Advantages
You don’t need to wait until the budget is prepared. Revert from lower-level staff instead
The non-use feedback system can cause it to make few mistakes
Lower levels can focus on their core discipline and their analysis, rather than spending their time developing budget estimates.
Sometimes, the budget is unrealistic due to insufficient knowledge by top management about the effort required at the department level to complete a job.
This saves time and reduces the need to involve all employees in budget preparation.
Underutilization or overallocation of resources could result from department-wise effort vs. the budget requirement finalized at top management
Participatory budgeting is also known as bottom-up budgeting.
Advantages
Advantages
Lower-level managers are motivated by the ownership of preparing budget for their department
Budgets are usually prepared by lower levels, and so they retain control. However, senior staff may lose control.
Due to in-depth knowledge of the subject, budgets are usually accurate
When budgets are combined during a participative meeting, it can cause the budget to get out of reach for the organization. This increases the need for lower-level managers to rework and also causes negotiations.
It raises the level of commitment among managers
Even though the targets may be easy to reach, an experienced manager might present a wrong budget.
While lower-level employees are busy preparing the budget for the year, the senior staff can use their time to work on strategic planning and improve the organization’s performance.
It is time-consuming because it involves many employees and requires discussions.