Albright Learner’s Guide

BSBPMG533
Manage project cost
 Table of Contents

INTRODUCTION....................................................................................................................4
I. DETERMINE PROJECT COSTS .....................................................................................5
1.1 ............ Identify Resource Requirements for Individual Tasks Identified in the Work Breakdown
Structure in Consultation with Relevant Stakeholders ....................................................................... 6
1.1.1 What is a Work Breakdown Structure? ............................................................................. 6
1.1.2 Determining the Resource Requirements ........................................................................... 8
1.1.3 Input from Stakeholders and Guidance from Others ..................................................... 19
1.2 .................... Estimate Project Costs for Project Budget to be Prepared within Agreed Tolerances
.......................................................................................................................................................... 22
1.2.1 Types of Costs Included in a Project’s Budget................................................................. 22
1.2.2 Tools and Methods Used to Estimate and Analyse Costs................................................ 23
1.2.3 Estimating Costs within Agreed Tolerances .................... Error! Bookmark not defined.
1.3 ................................................................................................................ Develop a Project Budget
.......................................................................................................................................................... 28
1.3.1 Process of Developing a Project Budget ........................................................................... 29
1.3.2 Options for Project Management Software...................................................................... 29
1.3.3 Appropriate Budgeting Techniques .................................. Error! Bookmark not defined.
1.3.4 Formats for Presenting Budget Estimates ........................................................................ 30
1.3.5 Putting the Budget Together.............................................. Error! Bookmark not defined.
1.4 .... Develop a Cost-Management Plan for Project Finances According to Scope of Responsibility
.......................................................................................................................................................... 38

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 II. MONITOR AND CONTROL PROJECT COSTS ........................................................41
2.1 .......Implement Agreed Financial-Management Processes and Procedures for Monitoring Actual
Expenditure Against Budget ............................................................................................................. 42
2.1.1 Implement Agreed Financial-Management Processes .................................................... 42
2.1.2 Monitor Actual Expenditure Against Budget .................................................................. 43
2.2 ............................................................ Identify Cost Variations and Evaluate Alternative Actions
.......................................................................................................................................................... 48
2.2.1 Alternative Actions for Variances ..................................................................................... 51
2.3 ............................. Implement and Monitor Agreed Actions for Maintaining Financial Objectives
.......................................................................................................................................................... 55
2.4 ............................................................................. Provide Accurate and Timely Financial Reports
.......................................................................................................................................................... 55
III. COMPLETE COST-MANAGEMENT PROCESSES ................................................59
3.1 .........Conduct Activities to Signify Financial Completion According to Task and Organisational
Requirements .................................................................................................................................... 60
3.2 ...................................................................... Review Project Outcomes Using Available Records
.......................................................................................................................................................... 62
3.3 ................................................... Review Cost-Management Issues and Document Improvements
.......................................................................................................................................................... 65
REFERENCES .......................................................................................................................71

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 Introduction
The ability to manage project costs is vital for the project manager. The skills that you learn in this
unit will prepare you for project management cost processes and documentation and be accountable
for the cost performance of your project. Please take part in all activities in this Learner Guide as they
will activate your learning.
The process of managing costs will vary according to the phase of the project. For example, managing
costs in the planning stages involves a detailed analysis of the labour needed to accomplish the
project. By breaking this down into components, it can be costed. You will also learn the five most
commonly used estimation techniques so that you can forecast costs accurately. Next, you will learn
how to create a budget that includes contingencies for the ‘unknown unknowns’ and ‘known
unknowns’.
Once a project has commenced, you will need to track and report on the cost performance of the
project using Earned Value Management techniques and formulae. You will find out how to
determine if your cost blowout is significant and needs attention, and some common causes and
corrective actions. Finally, you will learn how to plan and execute your project’s closure and review
the project’s success.

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 I. Determine Project Costs
In this chapter, you will learn about the first step of managing project costs, which is determining
project costs at the start of the project. This step is vital as the costs that you estimate and include in
the budget at the start of the project will determine the performance and success of the project as a
whole.

1.1 Identify resource

requirements for individual
tasks identified in the work
breakdown structure in
consultation with relevant
stakeholders

1.4 Develop a cost- 1.2 Estimate project costs

management plan for for project budget to be
project finances according prepared within agreed
to scope of responsibility tolerances

1.3 Develop a project

budget

There are four steps or elements in determining project costs. Firstly, this chapter will introduce you
to the Work Breakdown Structure (WBS) and how to create or use this document, along with input
from stakeholders and others, to determine the resource requirements for specific tasks.
Next, you will determine how to estimate project costs, develop a budget, and develop a plan that will
show how finances will be managed during the project.
In later units, you will learn more about monitoring and controlling costs as the project deliverables
are created, and how to finalise financial activities and review project cost management at the
completion of the project.

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 1.1 Identify Resource Requirements for Individual Tasks
Identified in the Work Breakdown Structure in
Consultation with Relevant Stakeholders
The first step in determining resource requirements for your project is creating or understanding your
project’s Work Breakdown Structure.

1.1.1 What is a Work Breakdown Structure?

Originally used in the United States Department of Defence, the Work Breakdown Structure (WBS) is
a summary of the products or deliverables to be developed for the project and the tasks needed for
each product. It is often in the form of a tree diagram, as shown below.
Figure 1: The six products/deliverables of developing a new toy (basic WBS format)

1.0 New toy

for 5-9 year
olds

1.3 Product 1.4 1.6 Project

1.1 Market 1.2 Product Developme Production 1.5
Research Design Marketing Management
nt Planning

Note that the words ‘task’ and ‘work package’ are used interchangeably and refer to the
smallest unit of work which you will include.
Once the deliverables are known, the tasks or units of work are added to the branches of the tree.
There may be several levels showing the sub-components needed to create the end products.

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 The purpose of determining resource requirements for individual tasks is to determine the total
amount of work and cost of work. This is done by summing up the cost of individual tasks. The total
labour costs will be needed to prepare the overall project budget.
Using a WBS, you can check that all tasks are covered and that there are no gaps or overlaps in the
tasks for the project

Figure 2: Work Breakdown Structure of developing a new toy, adapted from projectinsight.com.

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 1.1.2 Determining the Resource Requirements
Resource requirements refer to the means used to perform specific tasks to achieve the objectives.
These include human resources, equipment, work conditions, funds, and information.
It is important to determine the resource requirements yourself as a project manager, rather than using
the WBS from a client or another source without checking the information. Whether you are using
Jira, Confluence, GanttPRO, Slack, Project or another project management software, the process you
follow in determining resource requirements is the same.
When determining resource requirements, you will need the following resources:
 Work Breakdown Structure, detailing the units of work that are needed for each
deliverable. A list of all activities can be generated from the WBS.
 Human Resource Management Plan or similar, detailing the project staffing attributes
and personnel rates, including those for external contractors. Knowledge about staff
attributes will help you to determine which staff member can be allocated to which
unit of work. A Resource Calendar, if available, will provide information on which
days and shifts each resource is available during a work activity period, which will
assist in estimating resource availability.
 You may need expert help input such as stakeholder input in allocating units of work
to job roles. Stakeholders are people who are not directly working on a project but who
have something to gain or lose by the success of the project. They may include
managers and senior management, vendors, clients and more. Input can vary from
meetings and briefings, mentoring, informal conversations to formal training.
 Schedule Management Plan. The Schedule Management Plan is created during the
project’s Planning Process Phase and is considered a component of the Project
Management Plan (PMP). It defines how the project schedule is managed throughout
the project lifecycle. Additionally, it provides guidance and sets expectations for
project schedule policies and procedures for planning, developing, managing,
executing, and controlling the project schedule.
This document also contains the level of accuracy, which you will use in determining
resource requirements.

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 The Process for Determining Resource Requirements

6. Determine total 7. Provide resource

1. Allocate each task cost documents in an
cost of resources, agreed format, such as
to a job role. within an agreed for each work period or
margin of error. for each work package.

8. Document
2. Estimate the assumptions and
5. Add up costs of
duration of each constraints and
contractors.
activity or task. include in project
documents.

3. Determine the
4. Allocate each task
daily rate of
to a staff member or
contractors and
contractor.
current staff rates.

Figure 3: Process for determining resource allocation using the bottom-up method (from units of
work upwards) Further information about each step of the process is following.

1. Allocate each task to a job role.

Use expert input to determine the most suitable job role.
2. Estimate the duration of each activity or task.
An estimate of the duration can be obtained from the person in charge of each task,
people who have experience doing those tasks, and people who have managed a project
of a similar nature.
3. Determine the daily rate of contractors and current staff rates.
The daily rate of contractors is stated in the contract.
4. Allocate each task to a staff member or contractor.
Use the Calendar to determine whether existing staff members are available when
needed.

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 5. Add up costs of contractors.
When doing this, refer to the section below on constraints. Constraints are items which
limit the project’s options. One major constraint you may face is the length of the term
of contractors. The contracts may need to have a minimum length or be a fixed term.
6. Determine total cost of resources, within an agreed margin of error.
This is done by adding all cost of resources. The agreed margin of error is agreed upon
by stakeholders and senior management before the project commences.
7. Provide resource cost documents in an agreed format, such as for each work
period or for each work package.
8. Document assumptions and constraints and include in project documents.
Write down the assumptions under which you operate and the constraints that limit the
options available to you in the project. For the virtual stylist app, the assumptions may
include assumptions of which devices, operating systems, or mobile platforms will be
supported and which are not.

Taking the Project’s Assumptions and Constraints into Account

It is significant to document the assumptions and constraints that you are working within.
Assumptions are assumed beliefs that may or may not be true. For example, you may assume that
staff members have a certain skill level and availability.
There are many assumptions in construction based on statistical estimating techniques. For example,
you can assume that cabling can progress at 25 metres per hour. It is important to document all the
estimating techniques you have used.
As mentioned above, constraints are items that limit the options within a project. If you are subject to
constraints such as staff availability or contractor schedule constraints, you should document these as
well.

Using WBS Codes

When referring to a work package or task, use the code from the Work Breakdown Structure.
The code is the number showing the level of that task. For example, in Figure 1, the code for ‘Focus
Groups’ is 1.1.1. This indicates that the Work Breakdown Structure has three levels and that this is the
first activity in ‘Market Research’.

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 Case Study
Thread, a long-established European clothing company, entered the Australian market in 2018.
Thread opened five flagship stores in Sydney, Melbourne, Brisbane, Adelaide, and Perth the
same year. Thread’s aim is to be one of the top five clothing retailers in Australia within three
years.
Thread is unique in offering stylists in their stores who offer free half-hour consultations with
job seekers. Thread’s website also offers a 24-hour stylist. However, the stylist is often booked
up weeks in advance. To provide further styling service to customers, Thread has decided to
offer a virtual stylist on its website. Customers upload a photo of themselves to the site, along
with key dimensions, and the virtual stylist will display Thread clothing on your photo, as well
as recommend sizes and items which will go with the customer photo.

Virtual Stylist Project

You are the Project Manager for the Virtual
Stylist Project, called VSP for short. It is part of
your brief to cost the project.

Working with external website designers and

your in-house IT experts and human resources
department, you manage to produce the
following Work Breakdown Structure, based on
the five stages of the project (Analysis, Design,
Development, Testing, and Implementation).

From the Work Breakdown Structure, you

identify 14 work packages that need to be
completed (refer to the next page).

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 Virtual Stylist
Online Tool

Analysis Design Development Testing Implementation

Evaluate Website
Function Design AI definition Internal testing
Requirements integration

Program User Experience

System Design Integration testing Training
management definition

Produce detailed Early adopter

Program coding User testing
evaluation feedback

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 STEP 1: Allocate each task or activity in the WBS or Activity List to a job role

First, you identify one or more job roles for each of the 14 work packages.

Work package Job role

1. Evaluate requirements Business Analyst, stakeholders

2. Produce detailed evaluation Quality Manager, Business Analyst

3. Project management Project Manager

4. Function design Development Team, Quality Manager,

Project Manager

5. System design Development Team, Quality Manager,

Project Manager

6. AI definition Development Team, Quality Manager,

Business Analyst, Project Manager

7. User experience definition Development Team, Quality Manager,

Project Manager

8. Program coding Development Team

9. Internal testing Test Analyst

10. Integration testing Test Analyst

11. User testing Test Analyst

12. Website integration Development Team, Test Analyst

13. Training Trainer, Communications Specialist

14. Early adopter feedback Website administrator, Communications

Specialist, stakeholders, Project
Manager

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 STEP 2: Estimate the duration of each activity or task
Secondly, you identify the duration of work needed for each task (this may involve a further
breakdown of the work packages into work tasks).

Work package Job role Number

of
days
needed

Evaluate requirements Business Analyst 4

Stakeholders

Produce detailed evaluation Quality Manager 16

Business Analyst 4

Project management Project Manager 100

Function design Development Team 3 X 10

Quality Manager 10
Project Manager 2

System design Development Team 3 X 10

Quality Manager 10
Project Manager 2

AI definition Development Team 3 X 10

Quality Manager 10
Business Analyst 2
Project Manager 2

User experience definition Development Team 3X4

Quality Manager 2
Project Manager 2

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 Work package Job role Number
of
days
needed

Program coding Development Team 3 X 120

Internal testing Test Analyst 10

Integration testing Test Analyst 10

User testing Test Analyst 10

Website integration Development Team 20

Test Analyst 10

Training Trainer 20
Communications 10
Specialist

Early adopter feedback Website 10

Administrator

Early adopter feedback Communications 5

Specialist 5
Project Manager 5
Stakeholders

Total workdays: 743

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 STEP 3: Determine daily rate of contractors and current staff rates

Job Title Current staff rate Contractor rate

(per day) (per day)

Business Analyst $600

Project Manager $650

Quality Manager $600

Development 2 X $500 per day 1 X $700

Team

Test Analyst $600

Website $400
Administrator

Communications $500
Specialist

Trainer $500

Job Title Number of Contractor Total

days rate
(per
day)

Business 10 (min 1 $600 $12,000

Analyst month i.e.
20 days)

Senior 154 (round up $700 $112,000

Developer to 160)

Test Analyst 40 $600 $24,000

Communications 15 (round up to $500 $10,000

Specialist 20)

Trainer 20 $500 $10,000

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 STEP 4: Allocate current staff to job roles

Job Title Name of Current staff rate

staff (per day)
member

Project Manager Greta Stern $650

Quality Manager Sung Hee $600

Choi

Development John Smith $500

Team Angelo $500
D’Angelo

Website Suki Koyoda $400

Administrator

STEP 5: Add up costs of contractors for job roles not filled by current staff
Take limitations into account (e.g. contract length).

STEP 6: Determine total cost of resources, within an agreed margin of error

Total cost of external resources.
$168,000, +/- 10%

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 STEP 7: Provide resource cost documents in an agreed format, such as for each work
period or for each work package
Virtual stylist project: Work Breakdown Structure (outline format)
1. Analysis
1.1 Evaluate requirements 4/738 workdays = 0.5%
1.2 Produce detailed evaluation 20/738 workdays = 2.7%
1.3 Program Management 100/738 workdays = 13.6%
2. Design
2.1 Function design 42/738 workdays = 5.7%
2.2 System design 42/738 workdays = 5.7%
3. Development
1.1 AI definition 44/738 workdays = 6.0%
1.2 UI definition 16/738 workdays = 2.0%
1.3 Programming 360/738 workdays = 49.0%
2. Testing
2.1 Internal testing 10/738 workdays = 1.4%
2.2 Integration testing 10/738 workdays = 1.4%
2.3 User testing 10/738 workdays = 1.4%
3. Implementation
3.1 Website integration 30/738 workdays = 4.0%
3.2 Training 30/738 workdays = 4.0%
3.3 Early adopter feedback 40/738 workdays = 5.4%
249/738 of workdays to be filled by staff currently on payroll = 34%

489/738 of workdays to be filled by contractors = 66% with an estimated total resource

cost of $168,000.
Margin of error = 10%, i.e. $151,200 - $184,800.

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 STEP 8: Document assumptions and constraints and include in project documents

Document assumptions and constraints and include in the project documentation.

 Contractors assumed to work 20 days per month (average)
 Contractors to be employed for a minimum of one month
 All contracts to be on a monthly basis (costed at multiple of 20 days)

1.1.3 Input from Stakeholders and Guidance from Others

Stakeholder Input
Stakeholder, as defined by the Project Management Institute, Inc. (2013), is ‘an individual, group, or
organisation who may affect, be affected by, or perceive itself to be affected by a decision, activity, or
outcome of a project.’
With that definition in mind, stakeholders include, but are not limited to, the following:
 Project Sponsor
 Project manager
 Resource managers
 Contractors
 Project team members
 Clients
It is essential to consider inputs from stakeholders since they can provide necessary
information regarding a certain area of cost management, and specific documents that can be
used as a reference in determining resource requirements. To obtain their inputs, you must set
a meeting with the stakeholder and record the details of the meeting.

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 Some examples of stakeholder inputs are as follows:
 Project Sponsor – Since the project sponsor keeps track of the project funding, you
can obtain information such as the intended budget for the project. Additionally,
project sponsors develop the initial scope of the project; thus, they can provide you
with information regarding the expected work tasks and deliverables to be produced.
 Contractors – Contractors can provide you with information such as the capacity of
their labour force, specific details of the work they can provide, and the procedures for
doing such.
 Human resource managers – Human resource managers hold information regarding
your organisation’s labour force, the corresponding roles or tasks of the members of
the labour force, and salaries. You can use this information in deciding the division of
tasks and the costs that will be incurred for the tasks done.
 Project team members – Project team members perform technical work to complete
the project deliverables. Thus, you can obtain information such as specific tasks
corresponding to a role and elicit information such as additional equipment needed to
perform a specific task.
With the information at hand, you can determine the appropriate resource requirements for
the project to operate. However, it would be best if you elicited feedback after you have
drafted a list of the necessary resource requirements. This is to confirm that everything is clear
and ensure that no resource requirement is left out from the discussion.

Guidance from Others

Determining resource requirements can be daunting since there are a lot of tasks to consider.
Additionally, the complexity of determining the resources increases as the number of tasks increase
(i.e. when the project scope is wider).
To help you address this situation, you may seek guidance from qualified individuals or an
organisation who possess previous training, expert knowledge, or past experiences in determining
resource requirements and project cost management.
Some examples of these qualified individuals are:
 Subject Matter Experts
 Consultants (e.g. experienced project managers)
 Specialists

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 Generally, the guidance that these qualified individuals offer may be in the form of reviews,
suggestions, clarifications, and expert advice. This is to ensure that facts and details are
accurate, identify flaws or discrepancies in the processes, and point out problem areas which
may potentially pose challenges in the future as the project progresses. Additionally, qualified
individuals provide valuable insights into the project environment and can assist you in
determining the most suitable methods.
Guidance may be obtained through various methods and channels such as face-to-face
meetings, email correspondence, phone calls, and peer review sessions.

Checkpoint! Let’s Review

1. What is a Work Breakdown Structure?
2. What is the process for determining resource requirements?
3. What are stakeholders?

Further Reading
For further information on creating a Work Breakdown Structure,
read this article on Matchware.
WBS Software

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 1.2 Estimate Project Costs for Project Budget to be
Prepared within Agreed Tolerances
According to the Project Management Institute, ‘Cost estimates are a prediction that is based on the
information known at a given point in time. Cost estimates include the identification and
consideration of costing alternatives to initiate and complete the project.’
Once the number of workdays for the project is known, and the Work Breakdown Structure has been
created or checked, the next step is to estimate the total costs of the project.
There are five ways that estimates can be made (refer to below). You can use more than one of these
methods within your budget.
Project costs are estimated in preparation for the actual project budget development process. This will
be discussed in the next element.

1.2.1 Types of Costs Included in a Project’s Budget

The five types of costs included in a project’s budget are:
1. Fixed costs
These are the costs that do not change throughout the lifecycle of the project. Some of them
may be operating costs. For example, the cost of renting trucks and machinery in
construction projects is likely to be a fixed cost. Facilities may be a fixed cost. For instance,
in software projects, the development of space and development computers will be a fixed
cost. Other fixed costs may include the materials needed to develop the deliverables, such as
the concrete foundation, lumber and drywall in a building project.
2. Variable costs
These are costs that may vary over time, especially during long projects. Examples of variable
costs are the costs of fuel and travel for stakeholders.
3. Direct costs
These are costs directly associated with the deliverables of a project that can be predicted in
advance. The costs of external labour/vendors such as contracted programmers and trainers
are direct costs.

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 4. Indirect costs
These are costs that may be shared over several projects. For example, a Project Manager or
Consultant may be working on several projects at once, and therefore this cost is an indirect
cost.
5. Other
According to BrightHubPM, other factors can include costs which have already occurred and
are considered to be ‘sunk’, or not directly related to the deliverables of the project. For
example, pre-planning costs and licenses already purchased are sunk costs. There may also be
contingency/risk plans showing possible risks to cost.

1.2.2 Tools and Methods Used to Estimate and Analyse Costs

There are three methods used to estimate project costs.

1. Parametric estimating

2. Bottom-up estimating

3. Three-point estimating

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 1. Parametric estimating
This form of estimating uses a relationship between variables and historical data to calculate
the cost. For example, if you know the unit cost or duration and number of units required, you
can estimate the total cost so long as the variables are scalable.
Parametric estimating is widely used in construction. For example, Budget Direct has found
that the average cost of building a house in 2017–2018 was $313, 800 with an average square
meterage of 220.5. This amounts to $1,423 per square metre.
Using parametric estimating, the cost of a housing project can be determined from a square
meterage. However, use with caution as many other factors can also affect the price per
square metre, such as the location of the house, complexity, and luxury factors. The estimate
will be less accurate if the quantity is extremely large or small.

2. Bottom-up estimating
Bottom-up estimating is the process of estimating the value of small components and then
adding them up to estimate a total cost. It is typically used in calculating the cost of labour by
identifying the cost of each work package in the Work Breakdown Structure.
The main disadvantage of this method of estimating is that it is time-consuming to complete.
Accordingly, it has a high level of accuracy.

3. Three-point estimating
Three-point estimating is the method of estimating from optimistic, pessimistic and most-
likely values.
Two commonly used methods for three-point estimates are beta and triangular.
PERT (Program Evaluation and Review Technique) is based on the beta distribution. The
PERT estimate formula is, according to PM Study Circle:

𝑪𝒐 + 𝟒𝑪𝒎 + 𝑪𝒑
𝑪𝒆 =
𝟔

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 Where:

Ce
• Expected Cost

Cm
• Most Likely Cost
• This considers a typical case where everything goes as usual

Cp
• Pessimistic Cost, where many things go wrong during the project

Co
• Optimistic Cost, where everything goes better than expected.

On the other hand, the triangular estimate formula is:

𝑪𝒐 + 𝑪𝒎 + 𝑪𝒑
𝑪𝒆 =
𝟑

This technique minimises the biased views of the data.

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 In estimating project costs, you can use the three tools mentioned below. These are:

1. Estimating software

2. Organisational forms and templates

developed to estimate costs

3. Experts to seek expert advice

4. Previous project cost estimates and

budgets

In analysing project costs, the following methods can be applied:

1. Top-down cost analysis

In the top-down cost analysis, internal documentation relevant to costs is gathered and
analysed. The information contained in these documents is compared for consistency with
financial statements and audit reports. Areas where spending is large, can be flagged and
further examined to see how costs can be reduced in them.

2. Bottom-up estimating
In the bottom-up cost analysis, personnel who are involved in the project are interviewed, and
project processes are observed as they happen. This approach allows you to get a firsthand
idea of the different factors that go into driving up the project’s costs.

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 1. Analogous Estimating
In analogous estimating, values related to finances such as cost, and budget are used from
previous, similar projects as the basis to determine cost variations. Using this method, actual
values are used from previous, similar projects against estimated values in the current project.

2. Computation
In this method, the cost variations are determined by calculating the difference between the
Earned Value (EV) and the Actual Cost (AC). The resulting cost variation may be positive or
negative.

Three tools you can use to analyse project costs are the following:

1. Cost-benefit analyses software

2. Expenditure tracking software

3. Experts to seek expert advice

4. Previous cost analyses completed for similar

projects

5. Spreadsheets

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 3 Estimating Costs within Agreed Tolerances
When you set an estimate, you must include information about the level of tolerance that is included.
Tolerance refers to the amount of variance that will be tolerated, and who has permission to do this.
For example, a budget tolerance of 5 per cent within the project budget means the project manager
can deliver the project 5 per cent above or below cost without needing special permission from higher
managers or the Finance Department to do so.
The purpose of tolerance is so that stakeholders agree at the start of the project the number of budget
increases they will accept without taking up their time and effort in change requests and approvals for
minor budget increases. The project manager should get stakeholders to agree on an appropriate
tolerance and include it in the project documents.
During the project, if you believe your costs for a work package will be outside tolerance levels, you
will need to raise a formal change request to make your stakeholder aware of the issue and follow
the processes outlined in the next chapter. A change request is a formal proposal from the project
manager to senior management to alter a deliverable of a project.
The levels of tolerance should be set up before the project commences. The process of getting
agreement on tolerance is outside the scope of this unit.

Checkpoint! Let’s Review

1. What are the two most accurate methods of estimating?
2. What are the five types of costs included in a project
budget?
3. What is the significance of estimating costs within agreed
tolerances?

Further Reading
To see an example of a budget for building a house, click on the link
below.
The cost to build a house in 2019
For examples of different variables in project cost management, click
the link below.
Types of Project Costs - Examples of the Different Variables in
Project Cost Management
Click the link below for more information regarding cost tolerances.
Project financial management: Tolerance

1.3 Develop a Project Budget

A project budget includes all the costs authorised to undertake the project in order to complete the
project within a specified time and with specific results. It also includes all the costs for all activities,
milestones and tasks that the project includes. A budget is created in the planning phase and then is
monitored throughout the project execution.

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 In developing a budget, you should be aware of the budgeting processes that should be standardised in
a workplace budgeting procedure. These are:
 How to estimate the costs of a project
 How to identify and mitigate project budget risks
 How to record expenses (and income, if any) incurred
 How to adjust project budget
 How to monitor project budget
 How to finalise the project budget at the end of the project
 How to report on project budget

Cost estimates should be revised during the project and will become more accurate as the project
progresses.

1.3.1 Process of Developing a Project Budget

The first step in developing a project budget is estimating costs, as outlined in the previous section.
This estimate of costs forms the basis of the Activity Cost Estimate, as outlined below. Then, follow
the process of creating each output in Section 1.3.3.

1.3.2 Options for Project Management Software

In developing a project budget, project management software can be used. This helps project
managers create accurate budgets and monitor project costs and resource rates by automating
procedures. Additionally, they reduce the chances of human error and allow for data analysis. Below
are some of the Project Management Software you can use.
 EcoSys: EcoSys is a project management software that is suitable for entrepreneurs.
Its features include generating project estimates, forecasts, and automated scheduling.
 MPower: Suitable for the construction and engineering industry, this software
estimates labour, equipment, and material costs. It features a budget dashboard which
guides the user in tracking project costs.
 ARES PRISM: This is enterprise software which includes functions such as cost
control and performance measurement. Additionally, it generates best practices and
integrates them into different aspects of the project, including costing.
 e-Job Costing: This tool is suited for tracking business revenues and costs against a
job. It includes features such as real-time comparison of budget to actual data.

Alternatively, project managers can simply use spreadsheets, which is good enough for itemising
expenses and other costs for the project. This helps the project manager identify all the expenses
needed to complete the project, including wages for labour, equipment, materials, and more. This data
is then used in determining the budget to be allocated for the project.

BSBOPS501 29
 1.3.4 Formats for Presenting Budget Estimates

The estimate formats (i.e. outputs) stated below are covered in this chapter.

Activity Cost Estimate Basis of Estimate Cost Baseline

Project Funding
Cost-Management Plan
Requirements

Activity Cost Estimate

The estimates, including the estimates you created in the previous section, are collated in a document
called the Activity Cost Estimate. This is a quantitative assessment of the probable costs required to
complete project work.
This can be produced in a spreadsheet or similar format and includes the estimates of all the resources
needed for all activities. It is not limited to labour estimates and includes all direct and indirect costs
needed to produce the activities, including materials, equipment, services, rent, software, cost of
financing, etc.
The Activity Cost Estimate template below provides a basic template that can be adjusted as needed
for specific projects.
What supporting information should I include with the Activity Cost Estimate?
You should also include the Basis of Estimates with your Activity Cost Estimate (refer to sample
following).

Basis of Estimate
The purpose of the Basis of Estimate is to show how the project’s cost estimate was determined and
provide data which demonstrates the estimate ranges and confidence levels. All known assumptions
and constraints in regards to the project’s cost are included in the Basis of Estimate.

BSBPMG533 30
 The Basis of Estimate contains the same line items as in the Activity Cost Estimate. However, it needs
to include more detail about each line item in order to show how each estimate was decided. Review
the example on the following page.

This Type of Costs Costs Amount Estim Method Any Informa Rang The
should resour direct not of ated used assumpt tion on e of degree
be the ce ly directly funding cost for this ions cost of estim of
WBS (labou relate attribut held in estimat used in quality, ate confide
number r, d to able to reserves e such develop interest nce in
from materi proje the for as ing the rate, or the
the al, ct project continge parame estimate other estimat
Work equipm work (utilitie ncies tric, such as e based
Breakd ent, (staff s, rent, analog labour on
own service salari security ous, cost per availab
Structu , etc.) es, , etc.) bottom- hour/da le
re suppl up, etc. y informa
ies, tion
Any
traini
constrai
ng,
nts such
etc.)
as
minimu
m
contract
terms
or

Activity Cost Estimate Template

Basic of estimates Templates

BSBOPS501 31
 Basis of Estimate

Project: Date:

WBS Element:

Category Materials Labour Indirect Base Reserve Total Funding Cost

Costs Cost Cost Source Methodology

Indicates The cost The An The total Includes The Explains Describes
which of work indirect of the any sum the which method
stage of materials cost for cost that material, reserve of all source was used to
the for this this line relates work cost costs of arrive at the
project line item. item. to this and designated for funding cost estimate.
the line line indirect for the the for this
item item. costs. line item. line section
belongs item. of the
to. project.

WBS Description: This description captures the scope of this line item. It can appear in the
WBS.

Cost Description: This section should provide details on how costs were calculated. If costs
were derived from vendor quotes, wage rates or other means, this information must be included in
this section.

BSBPMG533 32
 Cost Baseline
Determining a project’s budget is a process of adding up the estimated costs of all activities, including
both direct and indirect costs, to create a Cost Baseline that can be approved. The Cost Baseline
provides a tool for monitoring and controlling the costs and performance of the project.
The cost (or budget) baseline is an essential and basic component of the budget. It states not only what
is to be spent but when it is to be spent. It can only be prepared once the project’s schedule has been
finalised. According to A Guide to Project Management Body of Knowledge (PMBOK), ‘the cost
baseline is the approved version of the time-phased project budget but excludes Management
Reserves’.
Developing a Cost Baseline requires all cost documents to date, which are the Activity Cost
Template, Basis of Estimate, Cost-Management Plan as well as the Resource Calendar or Work
Breakdown Structure, showing which resources will be spent and when, and the Project Schedule,
indicating the start and finish dates of all project milestones. The Cost Baseline also includes the
Contingency Reserve (refer to Section 1.3.4).

Project Funding Requirements Document

Some projects may receive all of their funding upfront, and others may receive them over the course
of the project, sometimes incrementally. It is ultimately the responsibility of the project manager to
ensure that the Cost Baseline can be covered by the available funding. The document that indicates
how funding is available over time is the Project Funding Requirements. This document includes any
Management Reserves available (if applicable). Refer to the sample document on the following page
Sample Project Funding Requirement Table with Sample Data

Project: Date:

Project Funding Janua Februa March April May June July

Phase Type ry ry

BSBOPS501 33
 Pre- Labour $30,00
planning 0

Equipme $5,000
nt /
Material
s

Planning Labour $80,000

Equipme $20,000
nt /
Material
s

Design Labour $130,0

00

Equipme $20,00
nt / 0
Material
s

Developm Labour $125,0

ent 00

Equipme $25,00
nt / 0
Material
s

Testing Labour $110,0

00

Equipme $10,00
nt / 0
Material
s

Transition Labour $70,00

to 0
Operation
s Equipme $30,00
nt / 0
Material
s

BSBPMG533 34
 Completio Labour $30,0
n 00

Equipme $5,00
nt / 0
Material
s

Totals $35,00 $100,00 $150,0 $150,0 $120,0 $100,0 $35,0

0 0 00 00 00 00 00

Cost-Management Plan
The Cost-Management Plan is an important part of the project management plan that describes how
project costs will be managed. It is described further in Section 1.4.
The purpose of the Cost-Management Plan is to show who is responsible for managing the costs of
the project (the project manager), who has the authority to approve changes to the project or its
budget, and how the cost performance will be measured and reported on. It documents how costs will
be reported.
Putting the Budget Together

Total Management
Project Reserve
Budget
Cost Contingency
Baseline reserves

Work Activity
package Contingency
cost Reserve
estimates
including Activity Cost
all direct Estimates
and
indirect
costs

Figure 4: Putting the Budget together

Figure 4 shows the components of a project budget. As in the diagram, the total project budget is
composed of components which are further broken down into sub-components.

BSBOPS501 35
 According to the PMBOK, Management Reserve is ‘an amount of the project budget withheld for
management control purposes.’ Additionally, they are budgets reserved to fund any ‘unknown-
unknowns’ or unforeseen works within the project scope and which can affect a project’s budget. The
Management Reserve is set by management rather than the project manager and established according
to the organisation’s policies. Usually, it is a percentage of the overall budget, between 5 per cent and
15 per cent. The Management Reserve added to the Cost Baseline makes up the total project budget.
As in the figure, the Cost Baseline is composed of the work package cost estimates, including all
direct and indirect costs, and the Contingency Reserves. The PMBOK formally defines Contingency
Reserve as a ‘budget within the cost baseline or performance measurement baseline that is allocated
for identified risks that are accepted and for which contingent or mitigating responses are developed.’
In other words, Contingency Reserve covers the ‘known-unknowns’ that can affect a project into
account and are generally 5 per cent to 10 per cent, according to PMBOK. However, they can also be
a fixed number. Contingency reserves can be developed in conjunction with stakeholders. One of the
various formulae for calculating contingency reserve is:
𝑬𝑴𝑽 = 𝒑𝒓𝒐𝒃𝒂𝒃𝒊𝒍𝒊𝒕𝒚 (𝒑𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆) 𝒙 𝒊𝒎𝒑𝒂𝒄𝒕 (𝒅𝒐𝒍𝒍𝒂𝒓 𝒂𝒎𝒐𝒖𝒏𝒕)
For example, if you know that a key staff member is likely to be required to work on another project
prior to completion of this project, the impact might be costed at a specific rate of $10,000. Say this
is 70 per cent likely to happen. The Contingency Reserve is then:
𝑬𝑴𝑽 = 𝟎. 𝟕 𝒙 $𝟏𝟎𝟎, 𝟎𝟎𝟎 = $𝟕, 𝟎𝟎𝟎
As the project progresses and there are fewer unknowns, it may be possible to reduce or even get rid
of the Contingency Reserve.
Referring again to Figure 4, the work package cost estimates are composed of The Activity Cost
Estimates and the Activity Contingency Reserve. The Activity Contingency Reserve refers to a
reserve (usually 5 per cent to 10 per cent) that accounts specifically for the risk within each activity
stated in the WBS.
To summarise, the Activity Contingency Reserve, when added to the Activity Cost Estimates, equals
the work package cost estimates. The work package cost estimates also include all direct and indirect
costs. When the work package cost estimates are added to the contingency reserve, they make up the
cost baseline. Then, when the cost baseline is added to the management reserve, the value represents
the Total Project Budget.

Contingencies and Tolerances

A contingency fund is an amount of money that has been set aside at the start of the project to cover
unforeseen expenses or losses or to pay for emergencies. Therefore, it must be available when
emergencies arise.
As was previously discussed, tolerance refers to an amount of budget variance that is tolerated. The
project manager and stakeholders agree on a tolerance level at the start of the project that is
convenient and acceptable.

BSBPMG533 36
 Checkpoint! Let’s Review
1. What is the difference between Management Reserve and
the Contingency Reserve?
2. What components make up the cost baseline?
3. What makes up the project’s total budget?

Further Reading
Click the link below to read an article about how to create a project
budget.
Creating a Project Budget – A Complete Guide for 2020
For more information on creating a budget or cost baseline, click the link
below.
Creating Budget Or Cost Baseline For Projects
Read more information on project management software by clicking the
link below.
Project Cost Management Software

BSBOPS501 37
 1.4 Develop a Cost-Management Plan for Project Finances
According to Scope of Responsibility
Once the total budget amount and Cost Baseline and Project Funding Requirements documents have
been prepared, the next step is to develop the Cost-Management Plan. The Cost-Management Plan is a
component of the project management plan and describes how project costs will be planned,
structured, and controlled.

Developing a Cost-Management Plan

To develop a Cost-Management Plan, the following steps are involved:
1. Resource planning
Project managers will begin by reviewing the Work Breakdown Structure and determining
what needs to be delivered through a hierarchy of most to least important. Through this
analysis, an understanding can be gained regarding areas where there will be large expenses
and those areas where expenditure will be minimal.
2. Cost estimation
As this second stage, the different cost estimation techniques can be employed (see Section
1.2.2) to estimate the expenditure of each area of the project.
3. Budgeting
Although it may appear as though the budgeting has been completed during the estimation,
this is not entirely sufficient. Through budgeting, more precise costs will be sought. Budgets
are typically released in phases as the project progresses. This directs the focus to meet each
milestone, as opposed to the budget as a whole.
4. Cost control
Through this process, the project costs are clearly documented and monitored for variances to
the original plan. This is a crucial, ongoing step to ensure corrective action measures can be
put in place to any avoid changes in costs that may jeopardise the project being completed
within the proposed budget. The cost management plan will also include what actions to take
in response to variances.

BSBPMG533 38
 Scope of Responsibility
The scope of responsibility refers to the breadth and depth of a person’s role within an organisation.
For example, what duties a manager undertakes, the resources they are responsible for, and the areas
within an organisation they are assigned to. Within a Cost-Management Plan, the scope of
responsibility refers to who is accountable for each part of the project’s costs and what is involved
with upholding this responsibility. It is paramount that all stakeholders are aware of the role they play
around finances, resourcing and authorisation within the Cost-Management Plan.
Therefore, the Cost-Management Plan states who is responsible for managing the costs of the project
(the Project Manager), who has the authority to approve changes to the project or its budget, and how
the cost performance will be measured and reported on.
The cost-management plan documents the cost management reporting formats, tools, and techniques.
Additionally, the Cost-Management Plan states the following for the project:
1. Units of measure: For example, staff hours, days or weeks for time, metres, litres or tonnes
for quantity, currency.
2. Level of precision: How the cost estimates will be rounded up or down, for example, $99.95
to $100.
3. Level of accuracy: An acceptable range (such as plus or minus 10 per cent) for resource costs.
4. Links to organisational procedures: Utilisation of unique codes or account numbers in the
work breakdown system that link to the organisation’s accounting system.
5. Control thresholds: Generally expressed as a percentage, these are the amount that the cost
performance can differ from the budget before action is to be taken.
6. Units of performance measurement: Earned value management (EVM) rules of
performance measurement are an example. These indicate how the success of the project will
be measured as it goes along. Within Earned Value, there are four measures: Schedule
Variance (SV), Cost Variance (CV), Schedule Performance Index (SPI), and Cost
Performance Index (CPI). If the SV is 0 and the Cost Variance is 0, the project is perfectly on
time and on budget. If the SPI and CPI are both 1, the project is perfectly on time and on
budget.

BSBOPS501 39
 7. Reporting formats: Defines the formats cost reports are in, and how frequently they are to
be delivered.
8. Process descriptions: Descriptions of other cost management processes.
9. Additional details: Information about additional cost management activities, which could
include descriptions of funding choices, procedures to cater to currency rate fluctuations, and
procedures to record project costs.

Further Reading
Click the link below for a sample Cost-Management Plan.
Cost Management Plan

Checkpoint! Let’s Review

1. What is a Cost-Management Plan?
2. What are the steps in creating a Cost-Management Plan?
3. What does scope of responsibility mean?

Classroom Activity for Chapter 1

Well done completing this chapter. You may now proceed to
your Classroom Activity Booklet (provided along with this
Learner Guide) and complete the classroom learning
activities associated with this chapter.
Please coordinate with your trainer/training organisation for
additional instructions and guidance in completing these
practical activities.

BSBPMG533 40
 II. Monitor and Control Project Costs

In the previous chapter, you learned about determining project costs, including determining resource
requirements, estimating project costs, developing a project budget, and developing a cost-
management plan.
Now, the project enters into the implementation and monitoring stage. It is in this phase when the
plans previously set are put into action. Additionally, during this phase, you must establish processes
to ensure that the project goes as planned, tasks are performed as specified in the schedule, and costs
are spent within budget. However, no matter how carefully a project is planned, changes are
inevitable. As a project manager, it is your job to control the changes incorporated in the project, and
analyse and document the impacts that come with the changes.
This chapter will thoroughly discuss monitoring and controlling project costs, including:
 Implementing agreed financial-management processes and procedures for monitoring actual
expenditure against budget
 Identifying cost variations and evaluating alternative actions
 Implementing and monitoring agreed actions for maintaining financial objectives
 Providing accurate and timely financial reports

BSBOPS501 41
 2.1 Implement Agreed Financial-Management Processes and
Procedures for Monitoring Actual Expenditure Against
Budget
In order to track actual expenditure against the budget, the following inputs are needed:

Project Funding
Cost Baseline Cost-Management Plan
Requirements

Work Performance Organisational Process

Data Assets

Work Performance Data

It is defined PMBOK as ‘The raw observations and measurements identified during activities
performed to carry out the project work. Examples include reported per cent of work physically
completed, quality technical performance measures, start and finish dates of schedule activities,
number of change requests, number of defects, actual costs, actual durations, etc.’

Organisational Process Assets

These are plans, policies, procedures, and knowledge bases specific to that organisation.

2.1.1 Implement Agreed Financial-Management Processes

The implementation stage follows Cost-Management Plan has been set. While financial-management
processes have been established previously during the development of the Cost-Management Plan, it
is important to have stakeholders informed about it as the implementation stage begins.

BSBPMG533 42
 To do this, you may set a meeting with the stakeholders to review and agree on the financial-
management processes, as well as the procedures for monitoring actual expenditures, as reflected in
the cost-management plan. Aside from reviewing and agreeing, this meeting will serve to clarify any
questions that stakeholders may have.

2.1.2 Monitor Actual Expenditure Against Budget

It is vital to note that, as the project manager, your role is limited to the monitoring of expenditure for
the project. Therefore, the process of accounting for business expenses, such as office supplies,
software and bank fees, is outside the scope of this unit.
Monitoring actual expenditure involves examining where the project is in terms of the budget. Not all
projects go according to plan; therefore, it is vital that expenditure is monitored regularly. Monthly
analysis of expenditure against the budget is essential to track changing patterns so that you can
respond with corrective action. This is achieved by looking at the cost baseline and the performance
data to establish what has been completed against the amount already spent.
Actual expenditure, known as Actual Cost (AC), is the cost incurred for doing project work. There
are two types of Actual Cost, namely, Cumulative AC and Current AC. Cumulative AC is the total
cost of activities to date, while Current AC is the cost within a current scheduled time period. The
planned amount of budget expenditure is known as Planned Value (PV). Planned Value also has two
types, Cumulative and Current. Cumulative PV is the approved budget for all activities scheduled to
be performed to date. Current PV is the approved budget for all activities within a current scheduled
time period.
Using a variety of formulae, you can monitor actual expenditure against budget. First, define the
Earned Value (EV). Earned Value is the
𝑬𝑽 = (% 𝒘𝒐𝒓𝒌 𝒂𝒄𝒕𝒊𝒗𝒊𝒕𝒊𝒆𝒔 𝒂𝒄𝒕𝒖𝒂𝒍𝒍𝒚 𝒄𝒐𝒎𝒑𝒍𝒆𝒕𝒆𝒅) 𝒙 (𝒕𝒐𝒕𝒂𝒍 𝒃𝒖𝒅𝒈𝒆𝒕)
For example, if your total budget is $200,000 and you have currently completed 50 per cent of all
work activities for the project, then your EV is $100,000. Refer to Further Reading for more
information.

BSBOPS501 43
 Strategies for managing project costs
Listed below are some strategies which you can use in managing project costs. These are:

1. Earned Value Management (EVM)

2. Performance Review

3. Forecasting

 Earned Value Management (EVM): This integrates schedule, costs, and scope to determine
the project performance and measures the actual project performance in terms of being on
track with the budget. In this strategy, when managing project costs, comparisons are made
between actual values and planned values which can then help them predict the project’s
performance and adjust accordingly.
This strategy is often used in situations where there are variances in project costs, (e.g., higher
than expected, lower than expected) or where proper resources and personnel can be allocated
for monitoring and reporting

 Performance Review: This compares the performance of work in progress, considering

parameters such as team morale, work quality and scope, to agreed baselines for the project,
such as schedule and cost baselines. In this strategy, project managers are able to determine if
costs for the project are within or exceeding expected values and can estimate costs needed to
complete the remaining work.
This strategy is often used in situations where individual accountability is important to the
project, multiple individuals have control over project costs, or where there are variances in
project costs (e.g., higher than expected, lower than expected).

BSBPMG533 44
  Forecasting: Forecasting predicts the costs and resources involved in completing a project. It
involves a formula (EV) that allows you to forecast future project performance, calculate delay
in the project and also establish why the delay may have occurred. In this strategy, project
managers are able to use historical and current project data to anticipate project costs and plan
resources accordingly.
This strategy is often used in situations where there is data available, that is useful for the
forecast or where it is necessary to plan the use of project finances due to limited resources.

Tools and Documents for Monitoring Expenditure

Processes and procedures for monitoring expenditure should be agreed upon with stakeholders. The
following tools allow you to report accurately to stakeholders about how the project is performing in
line with the schedule, as well as the cost and scope performance measures. To maintain accurate
records and make monitoring expenditure more streamlined, the following tools can prove useful:
 To Complete Performance Index (TCPI): An analytical tool that measures how viable the
project is at any point in time. The goal is to calculate the ratio between the budget and the
remaining work. This tool is useful to use if delays or budget excess is suspected.

𝑾𝒐𝒓𝒌 𝑹𝒆𝒎𝒂𝒊𝒏𝒊𝒏𝒈 (𝑩𝑨𝑪 − 𝑬𝑽)

𝑻𝑪𝑷𝑰 =
𝑭𝒖𝒏𝒅𝒔 𝑹𝒆𝒎𝒂𝒊𝒏𝒊𝒏𝒈 (𝑩𝑨𝑪 − 𝑨𝑪) 𝒐𝒓 (𝑬𝑨𝑪 − 𝑨𝑪)

 Variance Analysis: The Project Management Institute, Inc. (2013) defines variance analysis
as ‘a technique for determining the cause and degree of difference between the baseline and
actual performance.’ Variance analysis can be done by using spreadsheets.
 Project Management Software: A project’s success relies heavily on your ability to manage
the budget. There are a variety of programs available to support you in this. A Google search
will support you in identifying one that is suitable for your needs.

BSBOPS501 45
 Process for Monitoring Expenditure
In monitoring expenditures, take note of the following information you need, such as:
 Total budget for the tasks included within the scheduled time
 Actual expenditure to date and future expenditure commitments. Both are compared with the
total budget within the scheduled time to obtain the balance of budget remaining.
 Forecast Outturn, which describes the expected position of the project in terms of budget
 Positive or negative variance analysis, including explanations, during the comparison of
expenditures and forecast outturn to budget. Additionally, you need a documented action plan
to address unfavourable variances.
To monitor project expenditure, you must manage the receipts properly. This can be done with the aid
of a cost-management software application previously discussed in this Learner Guide. In addition to
that, you must record expenses promptly. This means documenting these expenses as soon as possible
so as to avoid the likelihood of forgetting such expenses. A cost-management software application can
also be used to document expenses conveniently and promptly.
One important process to perform in monitoring expenditures is to conduct regular reviews. Weekly
reviews, for example, can mean the difference between fixing a budget about to run 15 per cent over
and a budget that has run 30 per cent over after a month. Using one of the tools mentioned can ensure
that measures can be put in place early to get back on track.
A situation wherein monitoring expenditures are necessary is when you decide to change the
allocation of funds from one area to another. Monitoring expenditures in one area or task of the
project allows you to see if there are extra financial resources that can be transferred to other areas or
tasks which are expected to go over the task budget. Another example would be when the organisation
decides to increase savings from the project.
Make it clear to stakeholders and team members that you are on top of the budget, and it is being
tracked at regular intervals. This will help avoid unwarranted costs and hours being charged for
services that may never have occurred or did not take as long as expected.

BSBPMG533 46
 Carefully assess all ‘extras’ requested by stakeholders for impact and make it clear to the team that
this is occurring prior to them being added on. Small requests can unintentionally add thousands of
dollars to a project.

Checkpoint! Let’s Review

1. What is Actual Cost?
2. What is Planned Value?
3. What is Earned Value?

Further Reading
To learn more about Earned Value Management Systems, read the
conference paper written by Chance Reichel. You can access this
document by going to PMI's official website and typing 'Earned
value management systems (EVMS)' in the website search bar.

BSBOPS501 47
 2.2 Identify Cost Variations and Evaluate Alternative
Actions
PMI’s PMBOK® Guide defines a variance as ‘a quantifiable deviation, departure, or divergence away
from a known baseline or expected value’ (PMI, 2004, p. 379). Two key measures of cost variations
are the Cost Variance (CV) and Cost Performance Index (CPI). These need to be included in any
Cost Performance Reports.
Before proceeding, it is important to define first the terms that are going to be used for the
calculations in the following paragraphs. These terms are:
 Cost Variation: Also known as Cost Variance (CV), cost variation describes whether the cost
incurred from performing project activities cost more or less than the budget. In other words,
it indicates whether the project is financially performing well or not.
 Cost Performance Index (CPI): This measures a project’s financial effectiveness and
efficiency by considering the ratio between Earned Value and Actual Costs.
In considering cost variations, it is equally significant to consider variations in the project schedule
since any delays in the project can result in cost overruns. To further understand this, take, for
example, renting heavy equipment for a week. If the task to be done using the equipment is not
completed within the specified week, you will have to rent the equipment again. This means
additional costs for the project. The relevant terms include:
 Schedule Variance (SV): This quantitatively describes how much the project is ahead or
behind schedule
 Schedule Performance Index (SPI): This is a measure of the project’s progress by
considering how close the project is to being completed based on the schedule.
Mathematically, this is the ratio between the Earned Value and Planned Value.
As mentioned, the Cost Variance is the difference between work performance (Earned Value) and
Actual Costs. It is expressed by the sum:
𝑪𝑽 = 𝑬𝑽 − 𝑨𝑪
For example, in the project above, EV = $100,000. However, if the actual costs of the project to date
have been $120,000, then:
𝑪𝑽 = $𝟏𝟎𝟎, 𝟎𝟎𝟎 − $𝟏𝟐𝟎, 𝟎𝟎𝟎
𝑪𝑽 = − $𝟐𝟎, 𝟎𝟎𝟎 (project running over budget)

BSBPMG533 48
 To determine how much the project is under or over budget, use the Cost Performance Index. The
Cost Performance Index (CPI) is the measure of the efficiency of a project, the Earned Value divided
by the Actual Costs.
𝑬𝑽 𝟏𝟎𝟎,𝟎𝟎𝟎
𝑪𝑷𝑰 = 𝑨𝑪 = 𝟏𝟐𝟎,𝟎𝟎𝟎 = 𝟎. 𝟖𝟑

SPI > 1, project is ahead of schedule

SPI < 1, project is behind schedule

CPI > 1, project is under budget

CPI < 1, project is over budget

Figure 5: How to use SPI and CPI to measure performance

From Figure 5, A CPI of less than 1.0 indicates a cost overrun. Since the CPI calculated is 0.83, the
project is over the budget.

BSBOPS501 49
 The Cost Performance Index is typically presented in a table which uses colour coding to indicate
how much the costs have overrun, as shown already in Figure 5. In the case of the CPI = 0.83, this
would be shown in yellow.

Performance Measure Yellow Red

Schedule Performance Index (SPI) Between 0.9 and 0.8 or Less Than 0.8 or Greater
Between 1.1 and 1.2 than 1.2

Cost Performance Index (CPI) Between 0.9 and 0.8 or Less Than 0.8 or Greater
Between 1.1 and 1.2 than 1.2

Figure 6: Table indicating SPI and CPI to measure performance

Schedule Variance (SV) is the difference between the cost of work performed and the cost of work
scheduled; the Earned Value (EV) minus the Planned Value (PV). In the example above, the Earned
Value is $100,000. However, if the Planned Value of work to be completed within the same
timeframe is $76,000, then the calculation is as below.
𝑺𝑽 = 𝑬𝑽 − 𝑷𝑽 = $𝟏𝟎𝟎, 𝟎𝟎𝟎 − $𝟕𝟔, 𝟎𝟎𝟎 = $𝟐𝟒, 𝟎𝟎𝟎
This project has a positive Schedule Variance and is ahead of schedule. To work out how much the
project is ahead of schedule, use the Schedule Performance Index (SPI). It measures how close the
project is to being completed on schedule. This is very important as delays will cost money.
To calculate the SPI, divide the Earned Value by the Planned Value. For example, let us say that a
project is halfway through. The Planned Value, or work that was planned to be completed, is 50 per
cent of the total budget cost of $1 million ($500,000). However, the actual amount of work completed
is only $430,000. Therefore,

𝑬𝑽 𝟒𝟑𝟎,𝟎𝟎𝟎
𝑺𝑷𝑰 = 𝑷𝑽 = 𝟓𝟎𝟎,𝟎𝟎𝟎 = 𝟎. 𝟖𝟔 this case, the SPI is 0.86, indicating a schedule overrun that would be
shown in yellow.

BSBPMG533 50
 2.2.1 Alternative Actions for Variances
According to actiTIME, there are five major reasons for cost overruns.

1. Weak risk management

2. Estimation errors

3. Scope creep

4. Performance failures

5. Weak project design

According to consultants McKinsey & Co. and the University of Oxford (refer to Further Reading),
project cost overruns are common due to an overly optimistic estimation. Half of all large IT projects
massively blow their budgets, running on average 45 per cent over budget and seven per cent over
time.

When Costs are Over or Under Budget

Using the performance measures in this section, it is important to check costs on a regular and
frequent basis (refer to Cost Performance Reports below) to identify cost variances at an early stage.
If your costs have varied more than the minimum amount, you will need to come up with an action
plan to fix the problem. Review the process below for an action plan.

BSBOPS501 51
 1. Identify if variance needs to be acted upon – is it more than 0.2?
2. WHAT. Identify where the variance is in the Cost Baseline.
3. WHEN. When did the variance occur? Review the WBS components and schedule.
4. Identify WHY it happened. Was it labour overrun, materials overrun, indirect costs overrun?
Were materials defective? Keep asking why until you understand exactly why this occurred
without finger-pointing. Some people may be unwilling to give bad news, so make sure all
project team members know that you would like this information now rather than later. Take
time to fully understand the reasons why this occurred.
5. Take action. First of all, revisit the original documentation of the project to identify any
estimation errors, scope changes and to verify the validity of your business case. Ask the
question: What do I need to do next? This may include informing appropriate stakeholders of
all approved changes and associated cost; and bringing expected cost overruns within
acceptable limits. Review your resources and make sure that the right people are assigned to
the right tasks that they are competent for. You may need to move resources from non-critical
to critical tasks. Review the planned deliverables and strip out non-essential tasks without
sacrificing quality. Make sure review stages are managed efficiently, such as by scheduling a
meeting-based review.

Cost Performance Reports indicate the performance of the project using the performance measures
mentioned earlier, including Schedule Variance (SV), Cost Variance (CV), Schedule Performance
Index (SPI) and Cost Performance Index (CPI). These will provide stakeholders with a clear picture
of how the project is performing against expectations.
Regardless of whether your project is over budget or not, it is important to provide stakeholders with
regular and frequent (such as weekly) Cost Performance Reports. The process of producing Cost
Performance Reports will be discussed further in Section 2.3.

BSBPMG533 52
 Below are the outputs in controlling Cost Variance.

Cost Performance
Report/Project
Performance Report Cost Baseline Cost-Management Plan
includes Cost Variance
Corrective Action Plan

Cost Estimates Basis of Estimates

When Projects are Under or Over Schedule

Completing a task or project ahead of schedule can place a burden on customers and create problems
and dilemmas for the project manager. If one milestone is completed ahead of schedule, how will this
affect other milestones? Do you conceal the early finish from managers or clients? What happens if
they expect you to complete ahead of schedule the next time as well? Clients may not be ready for
early completion.
When projects are over schedule, it is important to identify this at an early stage by using the
performance measures regularly and at each milestone. Make sure you have status reports from
project team members regularly. Follow the same process as listed above. You will need to spend
time identifying WHY the project is behind schedule. Is it because of your team’s efficiency or the
complexity of the project? If so, these are core issues that are difficult to solve.

BSBOPS501 53
 Review your current plan as you won’t be able to solve the schedule issues unless you reorganise or
rearrange your current schedule, according to MyClientSpot. This may involve cutting down on
unnecessary items or working overtime. Be aware that cost, scope and time are closely linked, and
you cannot change one item without affecting another. Changes to time may affect quality, so make
sure you think through all the implications of schedule changes.

Checkpoint! Let’s Review

1. What are the five steps to take when a project is running
over budget?
2. What are five actions to take to reduce costs?
3. Why are projects that are under schedule a dilemma for
project managers?
4. What can be done to bring an over schedule project back
into line?

Further Reading
You can learn more about the causes of cost overruns from this article
by actiTIME.
5 Primary Causes of Cost Overruns
Click the link below to learn more about delivering a project from the
article by McKinsey and Co., (2012).
Delivering large-scale IT projects on time, on budget, and on value
MyClientSpot.com also provides information on dealing with a
project that is behind schedule. Click the link below.
A Step-by-Step Process of Dealing with a Project that is falling behind
Schedule
Additionally, you can read more information by reading an article
about over-budget projects. Click the link below.
What to do if your project runs over-budget, and how to prevent it

BSBPMG533 54
 2.3 Implement and Monitor Agreed Actions for Maintaining
Financial Objectives
During the project, the project manager should monitor costs and deliverables on an agreed schedule
(such as weekly) and report on performance in a Cost Performance Report as already mentioned. It is
important that stakeholders are informed of and agree to this schedule.
The Cost Performance Report is provided for the following purposes.
1. As well as monitoring cost performance and identifying and understanding variances from the
Cost Baseline, it should monitor work performance (Earned Value) against the funds paid out
(Actual Costs).
2. The Cost Performance Report allows the project manager to check that the total costs of all
WBS components and activities do not exceed the authorised budget.
3. It shows whether change requests are documented, approved, and acted on promptly.
4. It prevents unapproved changes from being included in the reported costs or resource usage
5. It informs stakeholders of all approved changes and their associated cost.
6. It brings cost overruns within acceptable limits, such as by using a less expensive human
resource/contractor.
You should document all activities relating to costs so that stakeholders are not surprised at the end
of the project by the cost of each WBS component, each change request, or each minor cost overrun.
Added together, these can bring a project significantly over budget.
Include in your documentation the agreed actions to bring costs back under control, such as
maintaining a tight project schedule, using a less expensive human resource, increasing the budget to
fit a more accurate estimate, finding a less expensive vendor or material supplier, or limiting the
number of change requests.

Checkpoint! Let’s Review

1. Why is it important to document all activities relating to
costs?
2. What should be included in the Cost Performance Report?
3. What other information should be included in documenting
the agreed actions?

2.4 Provide Accurate and Timely Financial Reports

A Project Status Report or similar report provides a quick overview of the project’s status and can
be delivered to stakeholders each week or month, as has been agreed by stakeholders and according to
your organisation’s policies. This regular report keeps the project manager accountable and will
include financial reports. These may vary according to project size, or where there is some variance
from the Cost Baseline. All data must be accurate; that is, it can be verified using other documents,

BSBOPS501 55
 such as the Activity Cost Template and the documents included in this manual. The report should
include all relevant details.

1. Although there are many different reports, the main purpose is to provide an account of the
project status at a specific point in time or after completion. As well as indicating the results or
performance of the project, a financial report provides a detailed analysis.
2. These reports may be communicated widely, and there are many templates available if necessary.
You may be asked to use project management applications or more specific accounting software,
or even Excel.
3. The format and style of reports will vary with your organisation, as will the policies you will
need to follow in reporting.
4. Whatever format is followed, the status report should:
 Be logically structured
 Be clear and easy to read
 Be well-organised with short and concise paragraphs
 Include terms of reference, summaries, and alternatives
 Include results, conclusions, and recommendations
 Be accurate.
5. In style, the status report can be either formal (long and including complex information) or
informal (less content and in a shorter format such as an email).

BSBPMG533 56
 6. Essential components of a status report include:
 High-level overview of the project status, divided into project identifiers, progress
summary, and overall project health and percentage completed
 Project identifiers: These include the name of project, ID/identifiers, project manager’s
name and date
 Progress summary: Includes high-level review of all project goals and progress made
towards them to date.
 Overall project health and per cent complete: This is divided into the categories of
Scope, Budget, Timeline, Risks, Quality, Per cent Complete. Colour coding can be used
(green, on target; amber, less than 10 per cent behind target; red, more than 10 per cent
behind target). Refer to Further Reading for more information.
 Project Milestones: After the high-level overview, the second section should include
information about progress towards each deliverable or milestone.
 Risk Management and change requests: The third section draws attention to all project
issues, states new issues/risks, provides updates on the Risk Management Plan to mitigate
existing risks, and draws stakeholders attention to any change requests or issues that need
their attention.

The financial reports will bring together a wide range of existing records and information, including:
 Banking information
 Cash flow
 Cost Baseline and Cost-Management Plan
 Reports on variances, such as a Cost Performance Report and Cost Variance Corrective Action
Plan.
 Typically, a financial report includes a written summary.
 This summary provides stakeholders with information regarding a project’s financial goals and
financial progress.
 The summary can then be used within discussions about project problems and the financial status
of the project.
 Your financial report will provide details on the Earned Value of a project during a specified
period of time within a project. It can also be used to influence financial decisions, such as
whether to inject more funds into the project.

BSBOPS501 57
 Checkpoint! Let’s Review
1. What are the essential components of a Project Status
Report?
2. What qualifies data as accurate?
3. What information do financial reports provide?

Further Reading
To see a template of a project status report, click on the link below.
Project Status Report Template
To learn more about Project Status Report Checklists, read this article
on Software Advice.
Your Project Status Report Checklist: Where to Include When
You Report to Stakeholders

Classroom Activity for Chapter 2

Well done completing this chapter. You may now proceed to
your Classroom Activity Booklet (provided along with this
Learner Guide) and complete the classroom learning
activities associated with this chapter.
Please coordinate with your trainer/training organisation for
additional instructions and guidance in completing these
practical activities.

BSBPMG533 58
 III. Complete Cost-Management Processes

In the previous chapter, you learned about monitoring and controlling project costs, including
implementing agreed financial-management processes and procedures, identifying cost variations and
evaluating alternative actions, implementing and monitoring agreed on actions, and providing
accurate and timely financial reports. Now, the project approaches the closure stage.
In the closure stage, you must finalise cost-management processes, which includes completing
documents such as the Project Closure report. This is necessary in order to successfully deliver the
project and authorise the handoff of the project. Additionally, it is in this stage wherein you review all
project cost-management documentation to identify cost-management issues and supply
recommendations to improve actions. After which, these must be documented to be used as a
reference for future projects.
This chapter will thoroughly discuss completing cost management processes, including:
 Conducting activities to signify financial completion according to task and organisational
requirements
 Reviewing project outcomes using available records
 Reviewing cost-management issues and documenting improvements

BSBOPS501 59
 1.1 Conduct Activities to Signify Financial Completion
According to Task and Organisational Requirements
Project completion should be planned and commenced when the project has just started. It includes a
process of financial reconciliation, as well as finalising the project deliverables, closing contracts, a
Project Closure report or similar, and review of the project and its performance.
Project completion includes checking that the project has met all its objectives, including objectives
that were added along the way in change requests. All project documentation should be updated and
finalised. This phase can include meetings and review meetings or documentation.
Most companies have their own Project Management Policy that provides an outline to ensure
projects are completed timely and efficiently. They also include what to do and who to report to when
the project is complete. You can consult with senior management to locate this should it not be made
available to you. As the project manager, you are responsible for obtaining approval for the completed
work from the senior manager and/or the project sponsor or customer. Both organisational and task
requirements must be considered.
Organisational requirements are formalised, general requirements that apply to all project managers in
an organisation. Some examples are quality assurance, legal requirements, standards, and protocol.
Task requirements are specific to each individual project manager and may vary depending on the
nature of the project. For example, coordinating with team members, finalising contracts, and project
reviews/deadlines.

Project Closure Report

A Project Closure Report is a document developed in the closure stage of the project to formally close
the project and authorise handoff to operations. Aside from that, it is used to document and assess the
successes and failures of the project, as well as to help generate best practices which can be applied in
future projects to avoid possible challenges and mistakes. This document is composed of the
following key elements:
 Project Overview: This contains a general description of the project, including needs, goals,
objectives, risks, success criteria, etc.
 Scope Statement: This contains the specific goals, outputs, and tasks of the project, described
in relation to project cost and project schedule.
 Project Accomplishments: This outlines the outcomes of the project and at what level they have
been achieved (i.e. performance).

BSBPMG533 60
  Performance Analysis: This contains the comparison between actual data and the baseline to
further support project accomplishments. In addition to that, project milestones summary and
financial summary may be provided to simplify the analysis.
 Lessons Learned: This contains information regarding challenges and issues faced throughout
the project, including the actions taken to address these issues. Additionally, recommendations
may be provided to be used as a reference so as to avoid the same issues and challenges in future
projects.

Financial completion
Financial completion means that all the expenditure for a project grant has been financed. This
includes:
 Final payments are made to vendors, with bonuses if necessary, so that the final work is
completed on time. The supplier is notified that this is the final payment.
 All costs associated with the project should be charged to the project.
 Reconcile monies spent and outstanding invoices against the original project budget in
addition to expected incoming invoices and the balance remaining after all invoices are paid.
 The process and documentation must follow processes approved by the finance department;
the financial records are not reconciled until the finance department agrees.

Further Reading
Click the link below to access a template for a project closure report.

Closure – Project Closure Report

Checkpoint! Let’s Review

1. What is a Project Closure Report?
2. What are the key elements in a Project Closure Report?
3. What activities are performed during project completion?

BSBOPS501 61
 1.2 Review Project Outcomes Using Available Records

Project Reviews or post-project reviews are commonly completed both in meetings, discussions and
through formal documentation.
A Project Review has a number of purposes:
 Summarises the project, its scope and staffing.
 States the project deliverables (both planned and actual)
 Provides a transition plan
 Outlines the budgeted and actual costs for each phase of the project. Includes comments about
why costs were under or over budget where this occurred.

In line with those purposes, the processes followed on a project stated below will enable you to
review costs against actual outcomes:
 Sending invoices on a regular basis (e.g. monthly)
 Paying invoices received promptly
 Checking for consistency across relevant financial paperwork
 Regularly updating financial paperwork (e.g. daily or weekly)

BSBPMG533 62
 Project review processes and procedures can vary between organisations, but they are essential to
future project success. Developing a review team ensures the process captures valuable data from a
variety of stakeholders. As a project manager, reviewing the key collection of reports, notes and
completion dates, for example, can support you in the review process. During review meetings, the
inclusion of interview questions can facilitate active participation and focus responses on specific
areas. After evaluating the findings, your role will involve producing a report. Findings support future
projects and help define best practice in performance.
The following processes will support the project completion report:
 Exploring the overall costs and benefits of the project
 Determining if goals were met
 Considering customer satisfaction with the final product
 Documenting the successes and recommendations
 Exploring the positive and negative lessons
 Gathering objective and honest data
 Reviewing through a future-focused lens
 Recording any corrective actions
Procedures that can support the processes above include:
 A Gap Analysis: This helps companies assess their current performance in line with the
desired performance. It answers questions such as: Did the project deliver a quality product in
line with original objectives? Were there gaps in the project and if so, how will they be
addressed next time?
 Data collection tools: Interviews, feedback forms and surveys, for example, help gather
valuable information from all stakeholders.
 Independent reviewers: Enlisting the support of an external company to review the project
can gather objective data.
 Present the report: Industry-specific templates can be used by organisations; however, word
publishing programs can be just as efficient when compiling the data.

BSBOPS501 63
 Documents required to review project outcomes may include:
 The Work Breakdown Structure (WBS).
 Project Budget
 Financial Report
 Status Report
 Cost Performance Report
 Cost Management Plan
 Project Funding Document
 Project Schedule

Checkpoint! Let’s Review

1. What is the purpose of a Project Review?
2. What are the necessary documents in reviewing project
outcomes?
3. What are some procedures that can support the project
review process?

BSBPMG533 64
 1.3 Review Cost-Management Issues and Document
Improvements
Review Cost-Management Issues
In reviewing cost-management issues, you have to examine the details established during the
application of control processes in cost management. One of the control processes involved is the
iterative reviews of actual performance against cost-management plans. Iterative reviews give you an
idea of the issues which frequently arise and at what particular point/s in the project duration they
occur. For example, in reviewing delays in the creation of an output, information from the regular
iterative reviews conducted may tell you that it was not the pace of the project team members, but the
delivery delays from the suppliers end that led to the delay of the entire project.
Another process that you could examine is the performance analysis in the form of graphs and charts
to demonstrate progress against the budget. For example, through bar graphs, you could analyse the
actual expenses juxtaposed with the baseline budget for the month. You can point out issues as to why
the project went over the budget for this month but stayed within budget during the previous month.

Document Improvements
Costs may be impacted by scope creep, poor planning, schedule delays, optimistic estimates, or other
factors. In Section 2.2.1, five major reasons for cost overruns were discussed. Here, some possible
actions to overcome theme are listed. The appropriate action to take will depend on the exact
circumstances.

BSBOPS501 65
 Major Reasons for Cost Improvement Actions
Overruns

Weak risk management  Conduct a comprehensive risk analysis

 Prepare a risk mitigation plan to overcome weak
areas
 Develop a contingency reserve that takes risks into
account

Major Reasons for Cost Improvement Actions

Overruns

Estimation errors  Allow only experienced specialists to conduct

estimation
 Review estimation methods chosen
 Encourage collaboration amongst stakeholders
during the estimation phase
 Review estimates carefully, in particular, time
estimates

Scope creep  This can occur with poor estimation so follow the
actions above
 Time tracking software allows managers to view
time on multiple projects
 Develop and approve project documentation and
communication that allows stakeholders to smoothly
review and approve change requests

Performance failures  A well-organised approach to project management is

key and keeping track of project performance at all
times
 Systematic control of every performance factor of a
project, from the hiring of contractors

Weak project design  Project planning documentation to be systematic and

detailed and include scope definition, time estimates,
communication strategies, risk management
strategies, a list of all stakeholders and their needs,
the business case for the project, definitions of roles
and responsibilities, project objectives, requirements
and deliverables, resource allocation targets, and a
description of quality assessment methods.

BSBPMG533 66
 It is important to hold a Lessons Learned meeting to reflect on what further can be done to make
improvements for the next project. This should include a section of the Project Review that
documents and analyses of any cost management issues.

Lessons Learned Meeting

A Lessons Learned meeting could be a useful way to gather feedback and encourage reflection on
what could be done better from project participants and stakeholders. Even better, a project manager
who is planning to follow this approach should keep a project diary to document lessons learned
throughout the execution of the project. Refer to the following section for further information on
documenting improvements.
The Project Review should highlight if costs were controlled adequately or not, and if there were
additional or excessive costs, the reasons should be stated. It is important to analyse why costs were
met or may have been higher than planned, so that future projects benefit from this insight and
information.
Use a table to show the Project Phase, Budgeted Cost, Actual Cost, Cost Variance, and reason for this
variance.

Documenting Lessons Learned

The following table indicates how lessons learned can be documented following the lessons learned
meeting at the completion of the project. This document, usually accompanied by summaries and
conclusions, provides an analysis of the impact that each issue had on the performance of the project.
The recommendations should be included in any final project review document or knowledge
management database so that they can be noted by upper management for the next project.

BSBOPS501 67
 Project Phase Budgete Actual Cost Reason for
d Cos Varianc Varianc
Cost t e e

Analysis

Design

Development

Testing

Implement-
ation

Categor Issue Problem Impact Recommendations

y N /
a Succ
m ess
e

Planning Opti The PM Estimates Follow a more reliable

m used were estimate process
is esti not such as bottom-up.
ti mate realisti
c s c and
es provi had to
ti ded be
m by adjuste
at stake d
es hold throug
ers hout
the
project

HR
Man
age
ment

Procure
ment
Man
age
ment

BSBPMG533 68
 Scope
Man
age
ment

Quality
Man
age
ment

Risk
Man
age
ment

BSBOPS501 69
 Although the lessons learned and review documentation will include documentation of cost
management errors, a more thorough process of analysing and documenting cost management
improvements should be followed.
Begin by reviewing all project cost documentation, in particular the Cost-Management Plan,
performance measures, Project Status Reports or Cost Management Report, and Cost Variance Action
Plans to identify where costs overran and how effective your corrective actions were in controlling
costs. If any corrective measures were not effective, analyse why and how you could have improved
these. Summarise and document all cost improvements that can be made in the future to more
effectively control costs.
In your report, consider the five largest causes of cost overruns – weak risk management, estimation
errors, scope creep, performance failures, and weak project design. Make suggestions or
recommendations across each of these areas.

Checkpoint! Let’s Review

1. What is a Lessons Learned Meeting?
2. How can lessons learned be documented?
3. What are the project cost documents to be reviewed?

Classroom Activity for Chapter 3

Well done completing this chapter. You may now proceed to
your Classroom Activity Booklet (provided along with this
Learner Guide) and complete the classroom learning
activities associated with this chapter.
Please coordinate with your trainer/training organisation for
additional instructions and guidance in completing these
practical activities.

BSBPMG533 70
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Blackburn, M. (2020, February 24). How to Make a Cost Management Plan. ProjectManager.
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draft/project-management-resources/templates/closure-project-closure-report/
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 Project financial management: Tolerance. (2010, April 2). PM Tips.
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https://pmstudycircle.com/2012/06/4-tools-to-estimate-costs-in-the-project-management/
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