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Chapter Objectives

• At the end of the chapter, you will be able to:

▫ Plan cost management

▫ Estimate costs
▫ Determine budget
▫ Control cost
▫ Control schedule

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Plan Cost Management

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Plan Cost Management

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Plan Cost Management

• Plan Cost Management is the process that establishes the

policies, procedures, and documentation for planning,
managing, expending, and controlling project costs.
• The key benefit of this process is that it provides guidance
and direction on how the project costs will be managed
throughout the project.

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Plan Cost Management

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Estimate Costs

• Estimate Costs is the process of developing an

approximation of the monetary resources needed to
complete project activities.
• The key benefit of this process is that it determines the
amount of cost required to complete project work

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Estimate Costs

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Determine Budget

• Determine Budget is the process of aggregating the

estimated costs of individual activities or work packages to
establish an authorized cost baseline.
• The key benefit of this process is that it determines the
cost baseline against which project performance can be
monitored and controlled.

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Determine Budget

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Determine Budget

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Control Cost

• Control Costs is the process of monitoring the status of the

project to update the project costs and managing changes
to the cost baseline.
• The key benefit of this process is that it provides the
means to recognize variance from the plan in order to take
corrective action and minimize risk.

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Control Cost (Tools and Techniques)

• Earned Value Management

▫ Earned value management (EVM) is a methodology that
combines scope, schedule, and resource measurements
to assess project performance and progress.
▫ It integrates the scope baseline with the cost baseline,
along with the schedule baseline, to form the
performance baseline, which helps the project
management team assess and measure project
performance and progress.

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Control Cost (Tools and Techniques)

• Earned Value Management

▫ Planned value. Planned value (PV) is the authorized
budget assigned to scheduled work. It is the authorized
budget planned for the work to be accomplished for an
activity or work breakdown structure component, not
including management reserve. The total planned value
for the project is also known as budget at completion
(BAC).
▫ Earned value. Earned value (EV) is a measure of work
performed expressed in terms of the budget authorized
for that work. It is the budget associated with the
authorized work that has been completed. the EV
measured cannot be greater than the authorized PV
budget for a component.
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Control Cost (Tools and Techniques)

• Earned Value Management

▫ Actual cost. Actual cost (AC) is the realized cost incurred
for the work performed on an activity during a specific
time period. It is the total cost incurred in accomplishing
the work that the EV measured.

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Control Cost (Tools and Techniques)

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End of the
Presentation

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