Project Cost Management by CMTI Sharjah, Dubai, UAE

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Project Cost Management

Our Students of PMP® at our Classes of PMP Dubai and PMP Sharjah often ask us about Project cost management and the topic of many recent failed projects due to mismanaged costs spring up. It's important to know that cost management doesn't only involve cost control but also estimating and budgeting too.

PMBOK® defines 3 distinct (or overlapping in projects of smaller scope) processes in Project Cost management as follows

1. Estimate costs
2. Determine budge
3. Control cost.

Estimate Costs

Costs are Estimated for all resources that will be charged to the project like labor, material, equipment and Services etc. Contingency costs are also included. Unit of Measure can be monetary currency or manhours

Inputs

Tools and Techniques

Outputs

Scope Baseline
( Scope Statement, WBS)

Project Schedule
( Activity duration & cost)

HR Plan
( Staffing Costs)

Risk Register
( for Risk Mitigating costs)

Enterprise Environmental Factors

Organizational Process Assets

Analogous Estimating
( Expert Judgment)

Parametric Estimating
( Statistical Technique)

Botton Up Estimating
( Component Estimating)

Reserve Analysis
( Contingency allowance)

Cost of Quality

Project Management Estimating SW
( IT tools and applications)

Vendor Bid Analysis

Activity Cost Estimates

Basis of Estimates

Project Document Updates

Determine Budget
All the Work Package costs are aggregated to arrive at the cost baseline authorized to execute the project. Budgets may differ from cost estimates and they don't include the contingency reserves.

Inputs

Tools and Techniques

Outputs

Activity Cost Estimates
(work package costs)

Basis of Estimates
( Details and Assumptions)

Scope Baseline
( Scope statement, WBS)

Project schedule

( Activity duration & cost)

Resources calendars

( Resource cost with time line)

Contracts

Organization process assets

Cost Aggregation

Reserve Analysis

( Contingency allowance)

Expert Judgment

Historical relationships

( Mathematical models)

Funding limit reconciliation

( Minimizing Variance)

Cost Performance baseline

( time Phased budget)

Project Funding requirements

Project document updates

Control Costs

Control Costs involves constant monitoring of the project and comparing the consumed project fund to physical work being accomplished to arrive at any variance between cost baseline and actual cost. it also involves corrective measures to control excess costs incurred.

Inputs

Tools and Techniques

Outputs

Cost Performance Baseline

Project funding requirement

Work Performance Data
(status and cost of physical work being accomplished)

Organization process assets

Earned Value Measurement
(Project Scope, cost and schedule measures)

Forecasting

To Complete Performance Index

Project Status Performance Reviews

Variance Analysis

Project Management Software

Work Performance Measurements

Forecasted Completions

Change requests

Organization process assets updates

project management plan updates

project document updates

If you are considering taking PMP® exam, we can help you with our PMP preparatory classes. Contact Us today for PMP Dubai and PMP Sharjah Classes

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Tel.: + 971 4 3547997

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Also See our PMP® Preparation Course Details.

Taken from the Project Management Institute, A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) – Fourth Edition , Project Management Institute, Inc., 2008.

PMBOK is a registered trademark of the Project Management Institute, Inc.

PMP is a registered certification mark of the Project Management Institute, Inc.

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