PM FPX 5333 Assessment 1 Budget Analysis Report PM-FPX5333 Project Budgeting, Procurement, and Quality Introduction:

We will start by analyzing the budget, which involves tracking cash flow within a project. This analysis is essential for understanding how payments are managed, received, and disbursed. Ensuring a consistent cash flow each month is critical for the sustainability of the project. Essentially, cash flow analysis evaluates the financial health of a business, which can be crucial for transitioning from simply starting a business to successfully operating one (2022).

Currently, the Nearlyfree project is in progress. Although the project has adhered to its allocated budget, it has reached the halfway mark and is now facing issues that suggest it may fail. Consequently, the project team has sought our help for guidance and project management services. After a thorough review, we focused on addressing the project’s needs and evaluating its financial status. This assessment enabled us to develop a cost estimation report that could potentially steer the project back on track. The analysis will include elements such as the Work Breakdown Structure (WBS), Total Cost of Ownership (TCO), and Return on Investment (ROI). Additionally, the report will apply cost estimation techniques derived from the cost estimation report, the current financial situation, and contingency plans designed to address potential points of project failure.

Current Financial State:

The initial budget for the Nearlyfree New Employee Orientation project was $25,000. However, an analysis of the project’s financial status indicates that the budget is likely to be exceeded. Initially, the baseline cost was $23,300, but the total project cost has now risen to $30,380, resulting in an overage of $8,080 from the original budget. These figures are concerning, particularly since the project is only halfway completed but has already exceeded its budget. To meet the project’s timeline, additional funds are urgently required.

The project leadership relied on an analogous cost data estimating approach, which proved insufficient for the initial budget proposal. Analogous estimating is a quick method with minimal information, leading to inaccuracies. A more effective technique moving forward would be the 3-point technique, which relies on the expertise of estimators to provide a more accurate estimate by accounting for both positive and negative factors. The 3-point estimating technique includes three key points:

• Most Likely (M) or Best Guess (BG): This reflects the average work required for a task if performed repeatedly by a team member.
• Pessimistic (P) estimate: This indicates the amount of work needed if negative factors come into play.
• Optimistic (O) estimate: This represents the amount of work required if positive risks occur (Indeed, 2023).

Cost Estimate:

Understanding the Work Breakdown Structure (WBS) is essential for assessing project cost estimates and improving the team’s understanding of each task’s associated costs (Organ, 2023). The WBS organizes the project hierarchically, providing a prioritized sequence of tasks.

To break down the WBS, the following four steps should be followed (Organ, 2023):

1. Generate a list of high-level requirements or scope deliverables.
2. Divide each high-level requirement into categories based on major deliverables.
3. Break down these categories into measurable activities.
4. Evaluate the work packages for completeness.

According to Organ, utilizing the WBS for initial project estimation significantly improves the chances of successful estimation, planning, and implementation. This approach helps global project teams minimize risks and avoid issues related to change control, scope creep, and project delays.

For the Nearlyfree project, the WBS was constructed following these steps. However, the project’s budgetary issues suggest that the project scope was not adequately considered, making the deliverables potentially unattainable.

Failure Points:

A detailed report from Nearlyfree.com indicates that the project is failing for two main reasons. Firstly, there is a significant gap between the projected budget and the actual costs. Secondly, critical deliverables were omitted during planning, leading to overall project failure.

Delays have also been detrimental, consuming a large portion of the budget. Proper scheduling and planning could have mitigated these delays, allowing the project to use its resources more efficiently. Funds spent on delays could have been used to strengthen other project aspects.

Turnaround Recommendations:

To reverse the project’s course, we recommend the following estimation techniques:

1. Total Cost of Ownership (TCO): Assess the comprehensive cost of the project, including direct and