CostManagement Lecture12 13 PDF
CostManagement Lecture12 13 PDF
CostManagement Lecture12 13 PDF
Project Cost Management includes the processes involved in planning, estimating budgeting estimating, budgeting, and controlling costs so that the project can be p within the approved pp budget. g completed
1. Estimate Cost
Estimate Costs is the process of developing an approximation of the monetary resources needed to complete project activities. Cost estimates are a prediction that is based on the information known at a g given p point in time. Sources of input information are derived from the outputs of project processes in other Knowledge Areas Areas. Once received received, all of this information will remain available as inputs to all three of the cost management processes. Costs are estimated for all resources that will be charged to the project. This includes, but is not limited to, labor, materials, equipment, services, and facilities, as well as special categories such as an inflation allowance or contingency costs.
Types of Cost
Estimate Cost..
Estimate Cost..
Estimate Cost..
Cost of Quality
Estimate Cost..
Cost of quality (COQ) refers to the total cost of all efforts related to quality throughout the product life cycle. Project decisions can impact p operational p costs of q quality y as a result of p product returns, , warranty claims, and recall campaigns. Therefore, due to the temporary nature of a project, the sponsoring organization may choose to invest in product quality improvement, especially defect prevention and appraisal, to reduce the external cost of quality.
Basis of Estimates
The amount and type of additional details supporting the cost estimate vary by application area. Regardless of the level of detail, the supporting documentation should provide a clear and complete understanding of how the cost estimate was derived Supporting detail for activity cost estimates may include: derived.
indicate Documentation of the basis of the estimate (i.e., how it was developed), Documentation of all assumptions made, Documentation of any known constraints, I di i of Indication f the h range of f possible ibl estimates i ( (e.g., $10 $10,000 000 (10%) to that the item is expected to cost between a range of values), and - Indication of the confidence level of the final estimate.
2. Determine Budget g
Determine Budget
A budge is a compilation of the individual cost estimates. Control Account : A control account is a management control point where scope, cost, and schedule are integrated and compared to the earned value for performance measurement. Control accounts are placed at selected management points in the WBS. Each control account may include one or more work packages, but each of the work packages must be associated with only one control account.
Determine Budget
Determine Budget
Determine Budget
4.
5.
Historical Relations
Any historical relationships that result in parametric estimates or analogous estimates involve the use of project characteristics (parameters) to develop mathematical models to predict total project costs. costs Such models can be simple : e.g., e g residential home construction is based on a certain cost per square foot of space) complex l : e.g., one model d l of f software ft development d l t costing uses multiple separate adjustment factors, each of which has numerous points within it). it)
3. Control Cost
Control Costs is the p process of monitoring g the status of the p project j to update the project budget and managing changes to the cost baseline. The key to effective cost control is the management of the approved cost performance f baseline b li and d th the changes h t to th that tb baseline. li Project cost control includes: Influencing the factors that create changes to the authorized cost baseline baseline,
Ensuring that all change requests are acted on in a timely manner, Managing the actual changes when and as they occur, g that cost expenditures p do not exceed the authorized funding, g, by yp period Ensuring and in total for the project, Monitoring cost performance to isolate and understand variances from the approved cost baseline, Monitoring work performance against funds expended expended, Preventing unapproved changes from being included in the reported cost or resource usage, Informing appropriate stakeholders of all approved changes and associated cost, and Acting to bring expected cost overruns within acceptable limits.
Control Cost
Control Cost
Control Cost
Terms to Know
Control Cost
Control Cost
BAC
PV JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY 0 2500 8000 13000 42000 62000 70700
PV
Control Cost
70000
60000
PV
PV
EV 0 2500 8000 13000 42000 62000 70700 0 3600 8000 10000 38000
50000
40000
EV
30000
20000
10000
0 JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
Control Cost
70000
60000
50000
AC
PV
PV JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY 0 2500 8000 13000 42000 62000 70700
40000
30000
20000
10000
0 JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
Control Cost
Control Cost