MODULE-7 (Project Cost Management)

How To Make The Best Use Of Live Sessions
• Please log in 10 mins before the class starts and check your internet connection to avoid any network issues during the LIVE
session
• All participants will be on mute, by default, to avoid any background noise. However, you will be unmuted by instructor if
required. Please use the “Questions” tab on your webinar tool to interact with the instructor at any point during the class
• Feel free to ask and answer questions to make your learning interactive. Instructor will address your queries at the end of on-
going topic
• We have dedicated support team to assist all your queries. You can reach us anytime at:
support@edureka.co
• Your feedback is very much appreciated. Please share feedback after each class, which will help us enhance your learning
experience
Copyright © edureka and/or its affiliates. All rights reserved.

IPR Acknowledgement
The materials in this course are based on the text, A Guide to the Project Management Body of Knowledge (PMBOK® Guide),
Sixth edition, Project Management Institute, Inc. 2017.
Project Management Professional (PMP)® is a global credential offered by PMI® Inc.
PMI®, PMP® & PMBOK® are registered marks of Project Management Institute, Inc.
Edureka is a globally recognized brand of Brain4ce Education Solutions, Global Registered Education Provider of PMI®
(G.R.E.P. #4021).
Note: Images in the materials are all based on the text, A Guide to the Project Management Body of Knowledge (PMBOK® Guide), Sixth edition, Project Management
Institute, Inc. 2017. All rights reserved.

Course Outline
Introduction
The Project Environment
Role of the Project Manager
Project Integration Management
Project Scope Management
Project Schedule Management
Project Cost Management
Project Quality Management
Project Resource Management
Project Communications
Project Risk Management
Project Procurement Management
Project Stakeholder Management

Project Cost Management
Topics
▪ Importance of Project Cost Management
▪ Plan Cost Management
▪ Estimate Costs
▪ Determine Budget
▪ Control Costs
▪ Trends & Emerging Practices
▪ Tailoring Considerations
▪ Considerations for Agile/Adaptive Environments

Objectives
After completing this module, you should be able to:
• Create project estimates for cost and budget
• Plan overall project cost management and control
• Calculate earned value of a project at a given point in time
• Forecast expected project cost and schedule based on trend

Importance of Project Cost Management
▪ Some of the key issues related to cost
• Cost of inputs and services change during the course of a project leading to cost escalations
• Cost estimation is difficult since there are many factors that influence the cost of a project and not all of
them are under the project’s direct control
• Delays in project execution increases the chances of cost escalation
▪ How Project Cost Management will help?

• Project cost management includes the processes involved in planning, estimating, budgeting, financing,
funding, managing and controlling costs so that the project can be completed within the approved
budget

Process Deep Dive:
Plan Cost
Management
Inputs, Tools and Technique and Output
Process Group: Planning
Knowledge Area: Project Cost Management

Plan Cost Management
The process of establishing the policies, procedures, and documentation for planning, developing, managing,
executing, and controlling the project cost.
When How
After Project Charter has been By providing guidance and
developed but before Define direction on how to manage
Activities process. the schedule through out the
Project Life Cycle.

Plan Cost Management - Components
Outputs
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Fig 7-2 Page 235

Plan Cost Management - Inputs
Project Management Plan
▪ Schedule management plan - associated processes & controls impacting cost planning
▪ Risk management plan - associated processes & controls impacting cost planning

Plan Cost Management – Inputs
Project Charter
▪ Provides following inputs from charter:

• Preapproved financial resources
• Project Approval Requirements

Plan Cost Management - Inputs
EEF and OPA
▪ EEFs and OPAs that can influence the Plan Cost Management process may include (but not limited to):
Enterprise Environmental Factors Organizational Process Assets

▪ Organization’s Culture/Structure ▪ Cost Control Procedures
▪ Market Conditions ▪ Historical Information
▪ Currency Exchange Rate ▪ Financial Database
▪ Published Commercial Information ▪ Cost Estimating/Budgeting Policies
▪ PMIS
▪ Productivity differences across the
world

Plan Cost Management - Tools & Techniques
Expert Judgment
▪ Expertise is provided by any group or individual with specialized knowledge or training in previous similar
projects, information in industry/discipline/application-area, cost estimating, budgeting & earned value
management

Data analysis - Alternatives analysis
▪ Developing the cost management plan may include choosing strategic options such as:
• Self-funding
• Funding with equity
• Funding with debt
▪ Alternatives like making, purchasing, renting or leasing for project resources

Meetings
▪ Project team may hold planning meetings to develop the cost management plan
▪ Participants at this meeting may include:

• Project manager
• Project Sponsor
• Selected project team members
• Selected stakeholders

Plan Cost Management - Outputs
Cost Management Plan
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 239

Process Deep Dive:
Estimate Costs

Estimate Costs
The process of developing an approximation of the monetary resources needed to complete project activities.
When How
After Plan Cost Management By providing monetary
process but before Determine approximation of the costs
Budget needed to complete the work
of the project

Types of Project Costs
Cost Type Explanation
Fixed Costs that stay the same throughout the life of a project
Variable Costs that vary on a project. Examples are hourly labor, or cost of raw materials
Direct Expenses that are billed directly to the project. An example is the materials used to construct a
building
Indirect Costs that are shared and allocated among several or all projects. An example could be a manager’s
salary. His people might be direct costs on a project, but his salary is overhead and would be
considered an indirect cost
Sunk Costs that have been invested into or expended upon the project but which cannot be recovered

Estimate Costs - Components
Inputs Tools & Techniques Outputs
Outputs

Estimate Costs - Inputs
▪ Defines how project costs will be managed and controlled
▪ Includes the method used and level of accuracy required to estimate activity cost

Quality Management Plan
▪ Quality related activities & resources

Scope Baseline
▪ Scope baseline provides the following inputs to estimate the cost:

• Project scope statement - Includes following:
− Product description
− Acceptance criteria
− Key deliverables
− Project boundaries
− Assumptions and constraints
▪ WBS: Provides the relationship among all components of project and project deliverables
▪ WBS Dictionary: Provides detailed information about the deliverables and description of work for each
component in WBS

Project Schedule
▪ Provides resource type, quantity and amount of time for which resources are applied to complete the work
▪ Involves determining the availability of staff, the number of staff hours required, and quantities of material
and equipment needed to perform the activities
Lessons Learned Register
▪ For improving the accuracy and precision of cost estimates of future phases

Risk Register
▪ Risk register could be reviewed to consider cost of responding to risks
▪ In case of a negative risk, the near term cost of the project may increase
▪ In case of a potential opportunity, it can benefit the business either by reducing the cost of accelerating the
schedule
Resource Requirements
▪ The types and quantities of resources required for every work package or activity

EEF and OPA
▪ EEFs and OPAs that can influence the Estimate Costs process may include (but not limited to):
Enterprise Environmental Factors Organizational Process Assets

▪ Market Conditions ▪ Cost Estimating Policies
▪ Published Commercial Information ▪ Historical Information & Lessons
▪ Exchange Rates & Inflation Learned Repository
▪ Cost Estimating Templates

Estimate Costs - Tools & Techniques
Expert Judgment
▪ Expertise judgment, guided by historical information, provides valuable insight about the environment and
information from similar projects done in past
▪ Information in the industry/discipline/application-area
▪ Cost estimation methods

Analogous Estimating
▪ When estimating costs, this technique relies on actual cost of similar projects carried out in past
▪ It is a gross value estimating approach which may be adjusted for known differences
▪ Used when limited amount of information is available
▪ It is less expensive and consumes less time than other techniques

Parametric Estimating
▪ Uses a statistical relationship between relevant historical data and other variables to calculate a cost
estimate for project work
▪ Calculations based on unit rate. No. of units needed. For example:

• If cost of a resource is $ 20 per hour, estimated cost to construct wall that requires 40 hours of
efforts is $800 days ($ 20 * 40 Hours)

Bottom Up Estimating
▪ A method of estimating a component of work
▪ Estimate for the project is arrived at by estimating the cost or work packages and rolling them up

Three Point Estimating
▪ Uses three estimates to define an approximate range for an activity’s cost i.e.
• Optimistic (Op): Activity cost based on analysis of the best-case scenario
• Pessimistic (Pe): Activity cost based on analysis of the worst-case scenario
• Most Likely (ML): Cost of activity based on realistic assessment of effort for the required work any
predicted expenses
▪ Based on three estimates, uses following formulas to calculate the expected duration:
• Triangular distribution: (Op + ML + Pe) / 3
• Beta distribution (traditional PERT formula): (Op + 4ML + Pe) / 6

Data Analysis - Reserve Analysis
▪ Cost Estimates may include

• Contingency Reserve:
– Estimated costs within the cost baseline, which is allocated for identified risks
– Calculated for Known Unknowns. Additional cost required at Work Package level (or higher levels)
to cover for identified risk
▪ Management Reserve:
• Additional cost required outside project baseline for changes to project scope or cost that had not been
anticipated
• Intended to address the Unknown Unknowns

Data Analysis - Cost of Quality
▪ Assumption about cost of quality may be used to prepare the activity cost estimates
Data analysis - Alternatives Analysis
▪ Evaluate several options, for example comparing the cost of buying versus making a deliverable

Decision Making - Voting
▪ This can be used to improve the estimates
PMIS
▪ Tools like spreadsheets, simulation software and statistical analysis tools can help simplify cost estimation
techniques

Estimate Costs - Outputs
Cost Estimates
▪ Quantitative assessment of likely costs of resources that are needed to complete the assigned tasks
▪ Costs are estimated for all resources that are applied to activity cost estimate such as:
• Direct labor
• Materials
• Equipment
• Services
• Facilities
• Information technology
• Cost of financing (interest charges)
• Exchange rates
• Cost contingency reserves

Basis of Estimates
▪ To provide a clear and complete understanding of how the cost estimate was derived
▪ Supporting detail for activity cost estimates may include:

• Documentation of the basis of the estimate (how it was developed)
• Documentation of all assumptions made
• Documentation of any known constraints
• Indication of the range of possible estimate (+10%)
• Indication of the confidence level of the final estimate

Updates to Project Documents
Project Documents
• Risk Register
• Assumption log
• Lessons learned register

Process Deep Dive:
Determine Budget

Determine Budget
The process of aggregating the estimated costs of individual activities or work packages to establish an
authorized cost baseline.
When How
After costs have been By providing Cost Baseline,
estimated but before against which the project
completion of project planning performance can be measured,
monitored, and controlled.

Determine Budget - Components
Outputs

Determine Budget - Inputs
▪ Describes how the project costs will be managed and controlled
Resource Management Plan
▪ This will provide personnel rates, travel costs, any other expected costs

Scope Baseline
▪ Scope baseline provides the following inputs to determine the budget:

• Project scope statement: Provide funding constraints
• WBS: Provides the relationship among all components of project and project deliverables
• WBS Dictionary: Provides detailed information about the deliverables and description of work for
each component in WBS

Cost Estimates
▪ Activities within each work package is aggregated to arrive at the estimate for each work package
▪ Indirect costs, if they are included in the project estimates, can be included at the activity level or higher
levels
Basis of Estimates
▪ Supporting details for cost estimates contained in the basis for estimates should specify any basic
assumptions dealing with the inclusion or exclusion of indirect or the other costs in the project budget

Project Schedule
▪ Includes planned start and finish dates for the project's:

• Activities
• Milestones
• Work packages
• Control accounts
▪ This information can be used to aggregate costs to the calendar periods in which the costs are planed to be
incurred

Risk Register
▪ Risk register should be reviewed to consider how to aggregate the risk response costs
Business Documents
▪ Business case: any financial success factors
▪ Benefits management plan: target benefits like NPV calculations, timeframe & metrics

Agreements
▪ Applicable agreements information and costs relating to products, services or results that have been or will
be purchased are included when determining the budget

Enterprise Environmental Factors
▪ Exchange rates
▪ Currency fluctuation in case of multi-year multi-currency projects

Organizational Process Assets
▪ Organizational Process Assets that can influence the Determine Budget process may include (but not limited to) :
OPA
▪ Cost Estimating Policies
▪ Cost Budgeting Tools
▪ Reporting Methods
▪ Historical Information & Lessons
Learned Repository

Determine Budget - Tools & Techniques
Cost Aggregation
▪ Cost estimates are aggregated by work packages

▪ The work package cost estimates are then aggregated for the higher component levels of WBS and
ultimately for the entire project

▪ Budget reserve analysis establish both the contingency reserves and the management reserves for the
project

Expert Judgment
▪ Expertise is provided by any group or individual with specialized knowledge or training in previous similar
projects, information in industry/discipline/application-area, financial principles, funding requirements &
sources

Historical Information Review
▪ Any historical information that result in parametric estimates or analogous estimates involve the use of
project parameters to develop mathematical models to predict total project cost
▪ Both the cost and accuracy of analogous and parametric models can vary widely. They are most likely to be
reliable when:
• Historical information used to develop the model is accurate
• Parameters used in the model are readily quantifiable
• Models are scalable, such that they work for large and small projects, and phases of a project

Funding Limit Reconciliation
▪ To reconcile expenditure of funds with any funding limits on the commitment of funds to the project
▪ In case of a variance between the funding limits and the planned expenditure, rescheduling of work to level
out the rate of expenditures can be carried out
Financing
▪ Project funding, common in long term infrastructure, industrial & public services projects

Determine Budget - Outputs
Cost Baseline
▪ Developed as a summation of the approved budgets for the different schedule activities
▪ Approved version of the time-phased project budget, excluding any management reserves
▪ Can only be changed through formal change control procedures
▪ Used as a basis for comparison to actual results

Project Budget Components
Work package
cost estimates
Activity
cost estimates

Project Funding Requirements
▪ Total funding requirements and periodical funding requirements are derived from the Cost baseline and a
margin is added for overruns and early progress

Project Documents Updates
Project Documents
• Risk Register
• Activity Cost Estimates
• Project Schedule

Process Deep Dive:
Control Costs
Process Group: Monitoring and Controlling Knowledge

Area: Project Cost Management

Control Costs
The process of monitoring the status of the project to update the project costs and managing changes to the cost
baseline.
When How
Done repeatedly during Help detect deviations from
Monitoring & Controlling phase plan enabling corrective or
before formal acceptance of all preventive actions to address
the deliverables the deviations

Control Costs - Key Activities
Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Sixth Edition, Project Management Institute, Inc., 2017, Page 259

Control Costs - Components
Tools & Techniques Outputs

Control Costs - Inputs
Project Management Plan
▪ The following elements of Project Management plan provide inputs in Control Cost process:
Cost Performance
Management Cost Baseline Measurement
Plan Baseline

Project Funding Requirements
▪ The project funding requirements include project expenditure and anticipated liabilities over a period of
time

Work Performance Data
▪ Raw observations associated with the schedule activities that contain information about project progress
such as:
• Which activities have started
• Which deliverables have finished
• Status of in-progress of activities
Lessons Learned Register
▪ This can help improve cost control in future phases of the project

▪ Organizational Process Assets that can influence the Control Costs process may include (but not limited to):

▪ Cost Control Policies
▪ Cost Control Tools
▪ Monitoring and Reporting Methods

Control Costs - Tools & Techniques
Data Analysis - Earned Value Analysis (EVA)
▪ To analyse the actual performance and progress of the project with respect to cost and schedule baseline EVM
develops and monitors three key dimensions for each work package and control accounts
Acronym Term Definition

The approved Cost Baseline for the work package
PV Planned Value
The budgeted value of the completed work packages at the specified point
EV Earned Value
The actual cost incurred during the execution of work packages up to a

AC Actual Cost specified point in time

Data Analysis – Variance Analysis
Name Formula Interpretation

Cost Variance (CV) Negative outcome means over budget and positive outcome means under budget
EV – AC
Schedule Variance Negative outcome means behind schedule and positive outcome means ahead of
(SV) EV – PV schedule
Indicates the efficiency of the project in utilizing the cost budget.

Cost Performance EV / AC
Index If CPI > 1, productivity is higher than expected, favorable performance If CPI < 1,
(CPI) productivity is less than expected, poor performance
Indicates the efficiency of the project in using the scheduled resources If SPI > 1, project
Schedule EV / PV
Performance Index
is ahead of schedule, good performance
(SPI) If SPI < 1, project is behind schedule, poor performance

Data analysis - Trend Analysis
▪ Forecasting
▪ Forecast for the Estimate At Completion (EAC) involves making projections of the conditions
and events in the project’s future
▪ Forecasts are generated, updated and reissued based on work performance data
▪ Forecast for the EAC typically based on the actual costs incurred for work completed plus an Estimate
To Complete (ETC) the remaining work
▪ Charts
▪ PV, EV and AC may be reported periodically and in a cumulative manner
▪ Shaped as S-curves, these depict whether project is behind schedule and over budget

Calculating EAC - Common Methods
Estimate at Represents the projected total final cost of work when completed
Completion (EAC) at AC + (BAC – EV)
the budgeted rate Used when actual performance is unfavorable and an assumption is made that
future performance will improve
Estimate at Represents the projected total final cost of work when completed
Completion (EAC) at BAC / CPI
the present CPI
Used when initial assumptions are no longer valid due to changed circumstances
and variance will continue to remain
When ETC (Estimate To Complete) will be performed at an efficiency rate that

Estimate at AC+
Completion (EAC) [(BAC-EV) / (CPI
considered both cost and schedule performance factors
considering both SPI *SPI)] Used when project schedule is a factor impacting ETC (Estimate To Complete)
and CPI factors

To-Complete Performance Index (TCPI)
▪ To-Complete Performance Index (TCPI) is a measure of Cost Performance Index (CPI) that is required to be
achieved with the remaining resources to meet specified management goals

TCPI Based on BAC Used when actual performance is unfavorable and an
BAC – EV/BAC - AC
assumption is made that future performance will improve
TCPI Based on new Used when initial assumptions are no longer valid due to changed circumstances
EAC BAC – EV/ EAC - AC
and variance will continue to remain

Project Management Information System
▪ Project Management Software is often used to monitor the three EVM dimensions (PV, EV and AC) to display
graphical trends and to forecast a range of possible final project results

▪ To monitor the status of contingency and management reserves for the project to determine if reserves are still
needed or if additional reserves need to be requested
▪ Over the period of time, these reserves may be used as planned to cover the cost of risk mitigation events or
other contingencies
▪ If the probable risk do not occur, the unused reserves may be removed from the project budget

Control Costs - Outputs
Work Performance Information
▪ Analysed work performance data

▪ Calculated performance indicators such as CV and CPI, TCPI and VAC values for WBS components

Cost Forecast
▪ Prediction of conditions and events in the project’s future based on information and knowledge available at the
time of the forecast.
▪ Provides a calculated EAC (Estimate at Completion) value or a bottom-up EAC value

Change Requests
▪ To request appropriate changes in the cost baseline or other components of the Project Management plan
through Perform Integrated Change Control Process
▪ May include preventive or corrective actions

Updates to Project Management Plan and Project Documents
Project Management Plan Project Documents
• Cost management plan • Cost estimates

• Cost baseline • Basis of estimates
• Performance management • Assumptions log
baseline • Lessons learned register
• Risk register

Earned Value Analysis (EVA) Example
▪ Case: You are a project manager for the construction of 20 miles of sidewalk. According to your plan, the cost of
construction will be $15,000 per mile and will take 8 weeks to complete. 2 Weeks into the project, you have spent
$55,000 and completed 4 miles of sidewalk, and you want to report performance and determine how much time and
cost remain.
▪ Solution: In next few slides, we will walk through EVM calculations
▪ Budget at Completion (BAC): We always begin by calculating BAC. Budgeted at completion simply means, “how much
we originally expected this project to cost”. In this example, BAC = 20 miles of sidewalk * $15,000 mile i.e. BAC of
$300,000
▪ Planned Value (PV): The planned value (PV) is how much was planned for this point of time. The value is expressed in
dollars
• Planned value(PV) = Planned % complete * BAC
• In this example, 2 weeks complete on a 8 week schedule, which equates to 25%, hence PV = 0.25 *
$300,000 = $75,000 after two weeks

▪ Earned Value (EV): Earned value is based on the assumption that as you complete work on the project, you are adding
value to the project. Therefore, it is simply a matter of calculating how much value you have “earned” on the project.
• EV = Actual % Complete * BAC
• In this case, we have completed 4 miles of a 20 mile project, which equated to 20%.
• EV = 20% * $300,000 = $60, 000
• This tells us that we have completed $60,000 work to work, or more accurately, we have earned $60,000 of
value for the project
▪ Actual Cost (AC): Actual costs is the amount of cost you have incurred at this point, and we are told in the example
that we have spend $55,000 to date. In this example, no calculation is needed.

▪ Cost Variance (CV): How much actual costs differ from earned value. CV is derived by calculating the difference
between EV and AC.
• CV = EV - AC
• In this example CV = $60,000 - $55,000 CV = $5,000
• A positive variance (as in this case), reflects that the project is doing better on cost than expected

▪ Schedule Variance (SV): How much our schedule differs from our plan. SV is derived by calculating the difference
between EV and PV.
• SV = EV - PV
• In this example EV = $60,000 - $75,000
• EV = - $15,000
• A negative variance (as in this case) reflects that we are not performing as well as we had hoped in terms of
schedule

▪ Cost Performance Index (CPI): Indicates as to how much we are getting for every dollar spent. It is derived by dividing
▪ Earned Value by the Actual Cost
• CPI = EV / AC
• In this example CPI = $60,000/$55,000 CPI = 1.09
▪ A CPI of 1 indicates that the project is exactly on track. CPI > 1 indicates spend within budget and CPI < 1
▪ indicates spend over budget

▪ Schedule Performance Index (SPI): Indicates as to how fast the project is progressing compared to the project plan. It
is derived by dividing the Earned Value by the Planned Value
• SPI = EV / PV
• In this example SPI = $60,000/$75,000 SPI = 0.8
• A SPI of 1 indicates that the project is exactly on track. SPI > 1 indicates project is ahead of
schedule and SPI < 1 indicates project is behind schedule
▪ This tells us that the project is progressing at 80% of the pace that we expected it to, and when we look at the
example, this conclusion makes sense
▪ We expected to lay 20 miles of sidewalk in 8 weeks. At that rate, after 2 weeks, we should have constructed 5 miles,
but we had only constructed 4 miles. That equates to 4/5 performance which is 80%

▪ Estimate at Completion (EAC): the amount we expect the project to cost, based on where we are relative to cost and
schedule.
• In this example, BAC ($300,000), CPI is 1.09. So EAC is $300,000/1.09 = $275,229.36
• EAC = BAC / CPI
• In this example EAC = $300,000/1.09
• EAC = $275,229.36
▪ We are doing better on costs (CPI of 1.09) than we had originally planned and this value reflects that.

▪ Estimate to Completion (ETC): How much more we expect to spend from this point forward based on what we have
done so far. It can be derived by taking our Estimate At Completion (what we expect to spend) and subtracting Actual
Cost (what we have spent so far)
▪ ETC = EAC - AC
• In this example ETC = $275,229 - $55,000
• ETC = $220,229
• This tells us that we expect to spend $220,229 more to complete the remaining amount of work, given our
performance thus far

▪ Variance At Completion (VAC): Difference between what we originally budgeted and what we expect to spend.
▪ VAC = BAC – EAC
• In this example VAC = $300,000 - $275,229
• VAC = $24,770
• This tells us that we expect to spend $24,770 less than what we originally planed to spend.
• Positive Variance indicates that we are doing better than projected, and a Negative Variance indicates that
we expect the project to run over budget.

Additional Concepts

Trends & Emerging Practices
▪ EVM (Earned Value Management) extended to include ES (Earned Schedule)
▪ EV (Earned Value) replaced by ES, AC (Actual Cost) replaced by AT (Actual Time)
▪ SV (Schedule Variance) = ES-AT > 0 means ahead of schedule
▪ SPI (Schedule Performance Index) = ES/AT which is efficiency of work achievement

Tailoring Considerations
▪ Knowledge management (Project Management Financial Database)
▪ Estimating & Budgeting policies
▪ EVM
▪ Agile approach for costing
▪ Governance of Costs

Considerations for Agile/Adaptive Environments
▪ Use lightweight estimation when scope is not finalized, for fast and high level forecast of labour cost
▪ Use detailed estimation for short term horizons
▪ Strict budgeting for high variability projects will require frequent cost adjustments

Assignment
Q1: List all cost components in a typical project from your industry. What sort of project risks are usually
considered for contingency reserve allocations?
Q2: Practice writing all the EVA formulae and list the various earned value recognition schemes.

Summary


MODULE-7 (Project Cost Management)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MODULE-7 (Project Cost Management)

Uploaded by

Copyright:

Available Formats

How To Make The Best Use Of Live Sessions

Copyright © edureka and/or its affiliates. All rights reserved.

Project Management Professional (PMP)® is a global credential offered by PMI® Inc.

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Plan Cost Management

▪ Trends & Emerging Practices

▪ Considerations for Agile/Adaptive Environments

Copyright © edureka and/or its affiliates. All rights reserved.

• Create project estimates for cost and budget

• Plan overall project cost management and control

• Calculate earned value of a project at a given point in time

• Forecast expected project cost and schedule based on trend

Copyright © edureka and/or its affiliates. All rights reserved.

▪ How Project Cost Management will help?

Copyright © edureka and/or its affiliates. All rights reserved.

Process Group: Planning

Knowledge Area: Project Cost Management

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Provides following inputs from charter:

Copyright © edureka and/or its affiliates. All rights reserved.

Enterprise Environmental Factors Organizational Process Assets

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Alternatives like making, purchasing, renting or leasing for project resources

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Participants at this meeting may include:

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

Process Group: Planning

Knowledge Area: Project Cost Management

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Defines how project costs will be managed and controlled

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Quality related activities & resources

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Scope baseline provides the following inputs to estimate the cost:

Copyright © edureka and/or its affiliates. All rights reserved.

Lessons Learned Register

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Risk register could be reviewed to consider cost of responding to risks

Copyright © edureka and/or its affiliates. All rights reserved.

Enterprise Environmental Factors Organizational Process Assets

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Information in the industry/discipline/application-area

▪ Cost estimation methods

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Used when limited amount of information is available

▪ It is less expensive and consumes less time than other techniques

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Calculations based on unit rate. No. of units needed. For example:

Copyright © edureka and/or its affiliates. All rights reserved.

▪ A method of estimating a component of work

Copyright © edureka and/or its affiliates. All rights reserved.

Copyright © edureka and/or its affiliates. All rights reserved.

▪ Cost Estimates may include

Copyright © edureka and/or its affiliates. All rights reserved.