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PMBoK, discussion #5: Project Cost Management
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PMBoK, discussion #5: Project Cost Management

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  • LC Costing – looking at the cost of the whole lifecycle of the product, not only cost of the projectValue Analysis – finding a less costly way to do the same workCost Risk
  • Funding requirements – “triggers” to fund the project.
  • LC Costing – looking at the cost of the whole lifecycle of the product, not only cost of the projectValue Analysis – finding a less costly way to do the same workCost Risk
  • Funding requirements – “triggers” to fund the project.
  • LC Costing – looking at the cost of the whole lifecycle of the product, not only cost of the projectValue Analysis – finding a less costly way to do the same workCost Risk
  • LC Costing – looking at the cost of the whole lifecycle of the product, not only cost of the projectValue Analysis – finding a less costly way to do the same workCost Risk
  • LC Costing – looking at the cost of the whole lifecycle of the product, not only cost of the projectValue Analysis – finding a less costly way to do the same workCost Risk
  • Transcript

    • 1. PMBoK Discussion #5Project Cost Management
      Alex Lutsaevsky
      Ciklum Program Manager/Consultant
    • 2. Cost Management
      2
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    • 3. Cost Management Plan
      • Can be formal or informal, but included to project management plan
      • 4. How the estimates are stated and in which currency?
      • 5. Rules for measuring the cost performance
      • 6. Reporting formats for cost performance
      • 7. Models
      • 8. Control thresholds
      • 9. Processes description
      • 10. Direct and indirect costs management, etc.
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    • 11. Estimate Costs
    • 12. Concepts
      • Life Cycle Costing
      • 13. Value Analysis
      • 14. Cost Risk
      • 15. Variable costs vs. fixed costs
      • 16. Direct vs. indirect costs
      • 17. Bottom-up estimation
      • 18. Reserve analysis
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    • 19. Estimate Costs
      Estimated direct costs, quality efforts, risk efforts, operational costs.
      6
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    • 20. Determine Budget
    • 21. Determine Budget
      Aggregating the estimated costs of individual activities to establish a cost baseline.
      +
      Reserves
      =
      Cost baseline
      8
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    • 22. Cost Baseline
      Cost performance baseline is a time-phased budget used to measure, monitor and control cost performance over the project.
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    • 23. Control Costs
    • 24. Earned Value Management
      • Planned Value, Earned Value, Actual Costs
      • 25. Variances
      • 26. Performance Indices
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    • 27. PV, EV, AC
    • 28. Variances
      • CV (Cost Variance): difference between the budgeted cost of an activity and the actual cost of that activity.
      CV = EV – AC
      • SV (Schedule Variance): difference between the scheduled completion of an activity and the actual completion of the activity.
      SV = EV – PV
    • 29. Performance Indices
      • CPI (Cost Performance Index): The cost-efficiency factor representing the relationship between the actual costs expended and the value of the physical work performed.
      CPI = EV/AC
      • SPI (Schedule Performance Index): The schedule efficiency ratio of earned value accomplished against the planned value. The SPI describes what portion of the planned schedule was actually accomplished.
      SPI = EV/PV
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    • 30. Forecasting
      • Budget at Completion (BAC)
      • 31. Forecasted Estimate at Completion (EAC) at the budgeted rate
      EAC = BAC + AC – EV
      • Forecasted Estimate at Completion (EAC) at the present CPI
      EAC = BAC / CPI
      • To-Complete Performance Index (TCPI) – projection of cost performance that must be achieved on the remaining to meet a specified goal
      (BAC – EV) / (BAC – AC)
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