For most businesses considering a new project, it is important to consider many of the resources used in the project which are already part of the business and will be just be transferred to the new project.
a) How would you treat the use of these resources?
In the new project, it is necessary to estimate the types and quantities of resources that will be required to perform each specific activity. Resources include people, material, equipment, facilities, and so forth. The estimated activity resources are used for estimating activity costs. The estimated cost for each specific activity can include the following elements:
1. Labor costs. These are the estimated costs for the various types of classifications of people who are expected to work on the project, such as painters, designers, and computer programmers. The labor costs are based on the estimated work time and the dollar labor rate for each person or classification.
2. Material costs. These are the estimated costs of materials that the project team or contractor needs to purchase for the project, such as paint, lumber, piping, shrubbery, carpeting, electrical cable, paper, art supplies, food, computers, and application software.
3. Equipment costs. Some projects require equipment that must be purchased as part of the project. Equipment can include items such as computers and machinery. For example, a project to construct a clinic would include the purchase of various types of medical equipment. Or a project to upgrade a manufacturing facility may include the purchase of new production machinery, or a new office might include the purchase of new computer systems.
4. Facilities costs. Some projects may require special facilities or additional space for the project team, for security reasons, to store materials, or to build, assemble, and test the project end item. If such facilities are required, the estimated costs for renting the space need to be...