NAME: MUHAMMAD UMAR.

ROLL NO: F16PG115.

SUBJECT: PPM.
SUBJECT TEACHER: SIR ABDUL QADIR. TOPIC:
INTRODUCTION TO PROJECT COST MANAGEMENT.
INTRODUCTION TO PROJECT COST
MANAGEMENT
  Cost management: is concerned with the process of planning
and controlling the budget of a project or business. It includes
activities such as planning, estimating, budgeting, financing,
funding, manging and controlling costs so that the project can be
completed within the approved budget.

  Cost Management Plan: In simple words, a cost management

plan is the outline of the project’s estimation, allocation and control of costs for
the required resources to complete all project activities. The project’s cost plan
configuration is one of the most essential parts of a project’s planning phase,,
 and effectively serves as a safety net that guarantees that project cost is kept
within the limits of the budget. The cost management plan in general terms
analyzes how the project costs will be planned, funded and controlled.
FOUR ELEMENTS/PHASES OF PCM
1. Resource Planning: Resource planning begins in the scope and execution plan development
process during which the work breakdown structure, organizational breakdown structure (OBS), work
packages, and execution strategy are developed.

2. Cost Estimating: The process of developing an approximation of the monetary resources
needed to complete project activates.

3. Determining Budget: Determine Budget Process is the third process of cost

management knowledge area. After estimations are done, all cost estimations are combined during
this process and overall project budget is determined.

Project Budget will have components. After activity cost estimates are complete, there will be
contingency reserves on top of these estimates such as activity contingency, management reserve
etc. to accommodate any risks if they occur during the project.

 4. Control Costs: The process on monitoring the status of the project to update the project
budget and managing changes to the cost baseline.
IMPORTANCE OF PCM
  The importance of cost management is easy to understand. To take a simple,
real-life example, if you decide to build a house, the first thing to do is set the
budget. When you have a sense of how much to spend on the project, the next
step is to divide the high-level budget into expenses for sub-tasks and smaller
line items.

  The budget will determine critical decision points such as: which designer to
hire- a high-end one who will construct and deliver the project end-to-end, or
someone who can help with a few elements and be able to work for a smaller
budget? How many stories should the house have? What quality of material
should be used?

  Without a predefined budget, not only is it difficult to answer these

questions.
OBJECTIVES OF PCM
 For a project to be called successful, it’s necessary
that:
it delivers on the requirements and scope 
its execution quality is of a high standard 
it’s completed within schedule and 
it’s completed within budget.
PROJECT COST SOFTWARE
 Cost management, similar to other aspects of
project management, gets complex with many
variables in play. The process itself is elaborate,
needing attention to detail along with a rigorous
approach. The use of project management software
can simplify this process considerably.

 Lets look at a few advantages of using project cost

management software.
Integration of data across planning, estimation,
budgeting, and control enables continuous monitoring
and quick, proactive responses, rather than one-off
interventions.
Integration of data across planning, estimation,
budgeting, and control enables continuous monitoring
and quick, proactive responses, rather than one-off
interventions.
Clear and easy reporting in the form of dashboards
and other rich Uis,
The complexity of multicurrency management in
projects across different geographical locations is
simplified with project cost software.
Some project costs management softwares are :
Hubstaff
Trigger
Easy projects
Avaza
mpower