A client comes to the company asking to copy a project that was executed 2 years ago in the same city, with the expectation that the new project will have the same cost and duration. While finalizing the project management plan, the project manager realizes that the baseline costs are much higher than the original project.
What could the project manager have done to avoid this?
To avoid the situation where the baseline costs are much higher than the original project, the project manager should have verified applicable budget inputs related to the project. This means thoroughly reviewing and updating cost estimations based on current market conditions, resource availability, and any other factors that might affect costs. By doing this, the project manager could ensure an accurate and realistic budget, reflecting the current economic and project-specific realities.
C is the answer. Prioritize options Evaluate and analyze the problem to determine root cause Review the plan Hold meetings
To avoid the situation where the baseline costs of a project are much higher than expected, the project manager could have taken the following action: B. Determined a budget reserve for this project. Here’s why this option is the most appropriate: Budget Reserve: A budget reserve, also known as contingency reserve, is set aside to cover unforeseen costs and risks that may arise during the project execution. By determining a budget reserve upfront, the project manager can account for potential cost overruns or unexpected expenses that may not have been anticipated when baselining the project. Managing Uncertainty: Projects inherently involve uncertainty, and even if the new project is a replication of a previous project, various factors could lead to cost variations over time (e.g., inflation, changes in resource costs, availability of materials). A budget reserve helps in managing this uncertainty by providing a cushion against cost increases.