**4. Scope management**

Project Scope must include all the work required, and only the work required by the client [6]. Scope management is concerned with defining and controlling the scope. It assumes greater importance than all other knowledge areas of project management. The scope should define the project by what should and should not be planned, budgeted, staffed and executed. Project scope also identifies the boundaries separating excluded activities or resources from those, which must be included for the project execution.

As stated earlier, projects are characterized by unknown factors and ambiguity, which delay the detailed development of scope and specifications to later stage of the project. Consequently, the scope of the project continually changes throughout the project. Sometimes, the original objective of the project may also change as the project progresses and we learn more about what is needed, what is possible, and what the costs are going to be. All these changes will impact on the project scope and its management.

Despite these changes, a clearly defined scope is crucial to developing a project plan, which provides a baseline for managing the schedule, the budget, and the detailed work of the project. Without a clearly defined scope, we have no basis for tracking progress on the project as defined or for altering schedule and cost criteria should the client request changes in the original project plan.

Once a project has been initiated, the project manager and an early-stage project team begin scope management by creating a preliminary scope statement based on the project charter. The preliminary scope statement formalizes between the project and its customer an agreement regarding quantifying project/product objectives and clarifying specific deliverables.

While the preliminary scope statement sets objectives at a higher level of abstraction, these objectives must be defined in as much detail as possible before explicit schedules, budgets, and work plans can be developed during the planning phase of the project management life cycle [9]. At this point, historical information and expert opinion are applied within the constraints and assumptions of the present project to create a body of requirements necessary for guiding project execution. This body of requirements is the foundation of scope definition, which subdivides the major project deliverables into smaller, more manageable components. It is important to translate requirements of the client into specifications, which denote finality and clear definition of project outcomes with specific quality parameters and measures.

This preliminary scope statement document sets various product performance criteria, delineates the initial project organization, boundaries, assumptions and constraints, while providing a high-level WBS and order of magnitude cost estimates [2, 6]. Below is an example of deliverable-oriented WBS (**Figure 1**).

**221**

*Project Management Concepts*

**5. Cost management**

**5.1 Cost estimating**

execution phase.

categories such as:

• Materials and installed equipment

• People

• Duration of usage (time unit)

• Cost rate for time unit

the project.

*DOI: http://dx.doi.org/10.5772/intechopen.93766*

This preliminary will be refined into the formal scope statement as the project moves into its planning phase. This refinement comes in the form of WBS. It provides a cornerstone of the scope management plan, which lays out how objectives and deliverables will be administered and how scope changes will be integrated into

WBS identifies all project activities to be executed but it does not include estimates of time, resources, or project costs. WBS should be initially developed at a higher level and expanded to include more specifications as you incorporate additional requirements of the project. As a next step, you will develop first two or three levels of the WBS, which essentially contain deliverables. These higher-level work elements are broken down into smaller and smaller work packages so that you can have manageable tasks to complete at any given point in the project [6]. The work package list is both inclusive and exhaustive. Preferably, these tasks should be at level 3 or lower. Remember that a good WBS encourages a systematic planning process, reduces the possibility of omission of key project work elements, and

To estimate cost for a work element, we need the following information:

Duration may not be relevant for materials, which are absorbed for completing the work. Number of resources for each resource multiplied by its duration and the rate will provide an estimate of that resource cost. Adding all the resource costs will give you an estimate of the activity cost. We sum up all these activity costs of the project to determine the total estimated project cost. These costs must then be managed and controlled along with the schedule throughout the project

The most accurate and most reliable estimate for a project can be developed when all of the elements of the WBS have been identified with a reasonable degree of reliability and when the resource breakdown structure (RBS) has been defined with the desired degree of certainty [2]. This estimate is referred to as the bottom-up estimate and it is derived from detailed information that is contained in the WBS and RBS at the time of the estimate. Resource Breakdown Structure (RBS) is similar to WBS. By resources we mean everything that will cost money to obtain and are necessary for the completion of the project (labor, materials, equipment, licenses, taxes). RBS follows the WBS structure of hierarchy and we can classify resources into major

simplifies the project by dividing it into manageable units.

• Resources required (people, equipment, tools, materials)

**Figure 1.** *Deliverable-oriented WBS.*

#### *Project Management Concepts DOI: http://dx.doi.org/10.5772/intechopen.93766*

This preliminary will be refined into the formal scope statement as the project moves into its planning phase. This refinement comes in the form of WBS. It provides a cornerstone of the scope management plan, which lays out how objectives and deliverables will be administered and how scope changes will be integrated into the project.
