PM 341 Project Cost and Budget Management
Winde Chavez
Writing Assignment 1.1
Jill Horsley
September 17, 2013

Importance of Cost and Value Management When the State of Massachusetts formally assumed control of the Boston CA/T from the Massachusetts Turnpike Authority (MTA), there was a concerted effort to pinpoint the causes of “the most expensive highway project in American history”. The MTA concluded that the project suffered from poor cost management and lack of adequate oversight from the project managers. They key features that define project success are: • Managing cost to achieve efficiencies, and • Creating and enhancing value.
These two elements enable project stakeholders to understand the activities and resources required to meet project goals, as well as the expenditures necessary to complete the project to the satisfaction of the customer. The management processes that can help project managers deal with the cost aspects of a project are: • A clear, complete, and unambiguous definition of the project and the scope of work involved • A thorough assessment of the potential risks involved, with well thought out action plans to minimize their possible impact • A well-trained and competent project manager • A thorough understanding, by all stakeholders, of the various types of costs that are likely to be incurred throughout the life of the project • A project organizational culture where there is free flow of communication, so that ALL project participant CLEARLY understand their responsibilities • A well-defined project work structure where work packages are broken down into manageable sizes • Meaningful budgets, where each work package is allocated its appropriate share of the total budget, commensurate to the work involved • An accounting system and coding scheme that are well