of the importance of keep-
ing your schedule up to
date throughout the life of
the project? One very
good reason for that ties to
the critical path concept. It,
too, is a “living” entity. In
other words, as activities
are completed ahead of
schedule or behind sched-
ule, the critical path will
change. If you don’t recog-
nize a change in the critical path through your ongoing schedule
updates, you could very likely reach a point where you are
spending time, money, and resources fighting fires that don’t
necessarily matter (i.e., not on the critical path) and not
addressing your actual problem areas!
Identifying How Much It Costs to Get Things Done
(Cost Management)
The third dimension of the project plan is its cost. Cost man-
agement, however, is more than just calculating the cost of the
overall project. It also consists of creating a budget (identifying
the cost of individual elements of work) and the time-scaling of
the overall project expenditure, as we’ll see. But once again,
let’s begin with some basic definitions.
Types of Costs
Estimating and budgeting project costs is not as easy as you
may think. One reason for that is because there are so many
types of costs that you should include in your estimate. Also,
there’s the overriding issue of direct vs. indirect costs. This is an
important distinction that you should understand, so let’s clarify.
A direct costis an expenditure specifically and directly
incurred by the execution of your project. These are typically
the most obvious categories of costs, and include the following:
Preparing a Detailed Project Plan: Step by Step 133Beware of the “Nearly
Critical”
Naturally, you must pay close atten-
tion to critical path activities.
However, watch out for activities that
are almoston the critical path—those
with just a handful of days of float or
less.And pay even more attention if
these nearly critical activities are diffi-
cult, uncertain, or risky.These activi-
ties can appear out of nowhere to
give you big problems!