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PROJECT MANAGEMENT

COST

V 1.0

B. M. Shahrier Majumder, PMP

Learning Objectives
Upon completion of this topic you will learn about
The processes, activities and documentation items for Project Management Cost Elements (and deliverables) for Project Cost Management Tools and techniques of the key activities of the Project Management Cost

Project Cost Management

Cost Management
Project Cost Management includes the processes involved in planning, estimating, budgeting and controlling costs so that the project can be completed within the approved budget.

Key Activities Management

of

Cost

Estimate Cost: The process of developing an approximation of the monetary resources of Estimate Cost: The process of developing an approximationneeded to complete project activities. Determine Budget: The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. Control Cost: The process of monitoring the status of the project to update the project budget and managing changes to the cost baseline.

Project Cost Management

Estimate Cost

Inputs Tools & Techniques Outputs


Scope baseline Project schedule Human Plan Risk segst resource Expert judgment Analogous estimating Parametric estimating at g Bottom-up otto up est estimating Three point estimating Reserve analysis Cost of quality Project management estimating software Vendor bid analysis Activity estimates Basis estimates Project updates cost of document

register e Enterprise environmental factor s Organizational process asset s

Estimate Inputs
Commercial database

>

Enterprise Environmental Factors


Market place condition Market place condition

Organizational Process Assets


Cost estimating policies Cost estimating templates Historical information Historical information Project knowledge database Lesson learn database

Project Cost Management

Estimate Cost > Tools and Technique sBottom-up estimating


Needs sufficient information to make an accurate estimate

Estimates made at the work-package of the WBS and rolled up Estimates made at the work package of the WBS and rolled up Very accurate

Vendor Bid Analysis


Analysis of what the project should cost, based on the responsive bids f lifi d d Wh j t d d t d from qualified vendors. Where project are awarded to a vendor under competitive processes , additional cost estimating work can be required of the project team to examine the price of individual and to deliver the cost that supports the final deliverables total project cost.

Determine Budget

Inputs Tools & Techniques Outputs


Activity estimates Basis estimates Scope baseline Project F di Rld li it ili ti Funding limit reconciliation Resources calendars schedule Contract Organization process asset s cost of Cost aggregation Reserve analysis Expert judgment Historical relationships Cost baseline Project funding requirement s Project updates performance

document

Project Cost Management

Determine Budget > Tools and Techniques


Cost Aggregation

Determine Budget
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>

Tools

and Technique sFunding Limit Reconciliation

The expenditure of funds should be reconciled with any funding limit The expenditure of funds should be reconciled with any funding limit of the commitment of funds for the project. A variance between funding limits and the planed expenditures will sometimes necessitate the resc heduling of work to level out the rate of expenditures.

Project Cost Management

Determine Outputs
Cost Performance Baseline
A time-phased budget that is used tod measure and monitor cost performance on a project The approved cost estimates Displayed graphically as cumulative costs over time Displayed as an S-Curve

Budget

>

Funding Requirements
Total and periodic funding requirements, are derived from the baseline and can established cost to exceed, usually by a margin to allow for either early progress or cost overrun.
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Control Costs

Inputs Tools & Techniques Outputs


Project plan Project Organizational process index Work performance Organizational process index Work performance funding requirement s informati onOrganizational process asset s management Eared management Forecastin value Work performance measuremen ts Budget forecasts assets updates Change requests Project plan updates Project updates management document

g To complete performance Performance reviews Variance analysis Project management softwar e

Project Cost Management

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Control Cost Techniques

>

Tools

and

Earned Value Management (EVM)


EVM in its various forms is a commonly used method of performance EVM in its various forms is a commonly used method of performance measurement. It integrates project scope, cost and schedule measures to help project management team assess an measure project performance and progress. EVM develops and monitors three key dimensions of each work package and control account. These are Planned Value (PV), Earned Value (EV) and Actual Cost (AC).

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Control Cost Techniques


Earned Value Analysis

>

Tools

and

Abbr Name Formula Good Bad Abbr. Name Formula Good Bad

EV E arn Va lu e BA C x Perc ent Compl ete NA NA PV Pla nn ed Valu e BA C x Per c ent Du r at ion NA NA CV C o s t Var i anc e EV- A C + v e ve S V S ch e du le Var i an ce EV- P V + v e ve CP I C o s t Pe r f o r m a nc e I nd ex EV / AC > 1 <1 SPI Sch edu le Per for ma nc e I nd ex EV /PV >1 <1

CV % C o s t Var i anc e P e r ce n t age CV / EV +v e v e CV % C o s t Var i anc e P e r ce n t age CV / EV +v e - v e S V% S ch e du le Var i an ce Pe r c e nt age S V/ P V + v e-ve EA C E s tim a te at Co m pl e ti o n BA C/ C P I < B AC > B AC VAC Var i an ce at C o m ple t io n BA C- E AC + v e ve ET C E stima te t o C omple te EA C-A C NA NA

Project Cost Management

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Question s

mail.shahrier@yahoo.co m http://bd.linkedin.com/shahri er

Project Cost Management

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