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Exercise Figure 5.1 is a project WBS with cost apportioned by percentages. If the total project cost is estimated to be $600,000, what are the estimated costs for the following deliverables? a. Design b. programming c. In-house testing What weaknesses are inherent in this estimating approach? https://d2vlcm61l7u1fs.cloudfront.net/media%2F0df%2F0dfdc890-80a0-4931-af47-22d6ba589450%2FphpKUgRZr.png Router systems project Cost: $600,000 Definitionn 0% Design 40% Implementation 50% Objectives 4% Requirements 6% In-house testing 40% Customer testing & revievw 0% Inputs 3% Programming 20% Outputs Files Interfaces 396 4% 10%

Answer: – This is the project in which the total project cost is given as $600000 /-
Then the project’s sub activities are mentioned in the WBS structure method at three levels. The project is at first level, then project’s three main activities are mentioned at second level, then each second level activity are attached with their respective third level activities. This is what the WBS structured is given for the question.
Answer – Estimated cost for following deliverables/activities are as below
Design – It’s cost is 40% of the project cost (Given in the question)
Project Cost is $ 600,000 / –
So design cost will be 40% of $ 600,000/-
40% * 600000
40*600000 / 100
240,000
So design cost for the project is $ 240,000/- (Answer)
Programming Cost – It is the activity at third level in WBS, comes under design activity/deliverable.
– Programming cost is 20% of the Design cost.
– Design Cost is $ 240,000 / – (as calculated in (a) part – design cost is 40% of project cost)
So programming cost will be
20% * 240000
20*240000 / 100
48,000
So programming cost for the design deliverable is $ 48,000/- (Answer)
In-house Testing cost – It is the activity at third level in WBS structure , comes under implementation activity/deliverable.
– In-house Testing cost is 40% of the implementation cost
– Implementation cost is 50% of the project cost
– So Implementation cost for the project will be
50% *600000 (project cost)
50*600000 / 100
$ 300,000 – Implementation cost for the project.
– In-house Testing cost is 40% of the implementation cost ($300,000)
40% *300000 (Implementation cost)
40*300000 / 100
120000
So – In-house Testing cost is $ 120,000/- (Answer)
Weakness in the estimation approach: The weaknesses in the estimation approaches are as below
The estimated value may vary i.e. it may increase or it may decrease. It is not sure that the estimated cost will be the final cost for the project. It can vary nearby to the estimated value.
The estimated approach can provide us the rough figure for judgment purpose only, but it is not the final value, as it may vary depending upon the situations in the project.
The estimated approach cannot confirm the final value for the project, as it is estimated based on many assumptions.
 
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