Professional Documents
Culture Documents
Richard Boser
Project Cost Management
Introduction
Course Objectives
Upon completing todays activities you will
be knowledgeable of tools and techniques
to:
Allocate overall costs to WBS work packages
Develop a project estimate and budget
Use Earned Value Analysis to control budget
Immediately apply PM principles on the job
1 Introduction
2 Estimating
3 Budgets & Cost Control
4 Earned Value Analysis
5 Accounting Issues
Source: http://californiamondioring.org/images/budgetcut.jpg
Project Management Training 6
Group -- Illinois State University
Controlling Project Costs
What is the most 8
difficult aspect of 8
controlling project 6
Labor Cost
costs? Accounting
Overhead
Predicting labor Scope Creep
costs
Cost accounting 78
process
Establishing
overhead costs August 2004 PM Network Magazine
member survey
Scope creep
Project Management Training 7
Group -- Illinois State University
Which Project Control Functions
Need the Most Improvement?
Cost Estimating
Costs for each resource
Cost Budget
Allocating overall cost estimates to individual
work activities to establish cost baseline
Cost Control
Controlling changes to project budget
Earned Value and variance analysis
Resource Planning
Inputs Tools & Techniques Outputs
PM Plan
WBS
Product
0.80 1.25 0.90 1.10
specs.
Detailed
0.90 1.10 0.95 1.05
specs.
Source: Barry Boehm, www.learningsolutions.com
Source: www.learningsolutions.com/WhitePapers/ProjectManagement-Phase_Gate.html
Source: http://www.lacp.org/Graphics/PoliceBike.jpg
Actual Cost/Time
Design Complete
Cumulative Expected
Project Cash Flow
Cost
Cost
Baseline
Source: http://evm.nasa.gov/definition1b.html
PV
AC
EV
Source: http://www.stsc.hill.af.mil/crosstalk/frames.asp?uri=1999/04/smith.asp
Earned Value Graphic Report
Planned
Actual Value
Cumulative
Values Costs
Earned Value
Time
Date Date
$50,000
CV = EV - AC PV
AC
EV
$100,000
$80,000
$50,000
PV BAC
AC ETC
PV = FV/(1+r)n
FV = future value
r = interest rate
n = # of time periods