Question

Students are required to write an assignment report on the topic of “Estimating Time, Budget and other Project Resources”.

Answer 1

An assignment report on Estimating Time, Budget and Other Project Resources

Project management involves three stages. Planning, execution, and delivery. Time and budget are variables which are agreed upon during the first stage of project management, known as planning. There are several factors that go into estimating the timeframe within which a project needs to be delivered and there are several constraints and deliverables that need to be taken into accounting before allocating a budget for a project.

Estimating Time

In order to better understand how we can estimate or forecast the amount of time that we'll need for a project, we'll look at an example.

Eg: Let's assume that we're a Pharmaceutical company that needs to develop an innovator drug. Developing an innovator drug is a complex process. In order to accurately estimate the timeframe of a project, we'll need to understand the following factors

Factors Involved In Estimating Time

Example: Pharmaceutical Company developing an Innovator Drug (Sages involved in developing an Innovator Drug)

Understanding the Various Stages Involved in the execution and delivery stages of a project

Here we'll need to take into account all the stages involved in the execution and delivery of an innovator drug. Stage 1) Research & Development 12 - 16 Months Stage 2) Pre Clinical and Clinical Trials 9 - 12 Months Stage 3) FDA Approval 10 - 12 Months Stage 4) Patenting 3 - 6 Months Stage 5) Manufacturing 8 - 12 Months Stage 6) Sales & Distribution - 12 - 24 Months Total Time Estimated Time for the project is between 54 - 82 Months or between 4.5 - 6.8 Years.

Estimating budget & Other Resources will also require the project management team to study the various stages involved in execution and delivery, however, instead of just taking the time into account, budget allocation requires us to to take time and cost into account by classifying expenses as capital expenditure, operational expenditure. & Cost of Goods Sold

Sages involved in developing an Innovator Drug	Estimated Cost	Capital Expenditure	Operational Expenditure	Cost of Goods Sold
Research and Development	45%	R&D is a one time cost and cab be accounted under capital expenditure
Pre Clinical and Clinical Trials	5%		Pre Clinical and Clinical trials generally continue throughout the lifecycle of a drug for continuous improvement and can be classified as operational expenditure
FDA Approval	5%		Legal fees can also be accounted for under operational expenditure
Patenting	5%		Patent fees and legal fees will also fall under operational expenditure
Manufacturing	30%	Setting up Property, Plant and Equipment for manufacturing will be accounted for under capital expenditure	Payroll, Admin, rent etc will fall under the operational expense	Cost of Goods sold or COGS will include the cost of raw materials for producing drugs such as chemicals m formulations etc.
Sales and Distribution	10%			Cost of sales and distribution will directly fall under cost of goods sold

By the budget analysis carried out above its obvious that we'll need to allocate a vast amount of resources towards the Research and Development of an innovator drug.

Time and budget also go hand in hand, longer the time frame, higher the cost of execution and delivery.