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1COST MANAGEMENT
What is Cost Management?                          2• Process of planning and controlling the budget of  the project.• Cost...
Principles                          3• Cash Flow Analysis (Estimated project cost and  benefit of project organization).• ...
Principles                       4• Direct cost (Directly related to project)       Salary       Purchase of software• I...
Why is it important?                        5• Identify each of the costs within your project• Ensure that expenses are ap...
What does it include?   6•   Budget•   Benefit•   Spending•   Expenses•   Funding•   ROI
How is it done in project?   7•   Cost Management Plan•   Cost Baseline•   Activity Cost estimates•   Performance Measurem...
Cost in Project Management   8         Estimate Cost       Determine Budget          Control Cost
Estimating Cost   9•   Projected cost of a project.•   Analogous Estimating•   Parametric Estimating•   Bottom-up Estimati...
Determine Budget          10•   Cost Aggregation•   Reserve Analysis•   Historical Data•   Funding Limit Reconciliation
Control Cost   11• Earned Value  Management• Forecasting• To-Complete Performance  Index (TCPI)• Variance Analysis• Perfor...
Earned Value Analysis               12• Planned Value   – Total cost estimate planned to be spent     on an activity durin...
Rate of Performance                           13• Ratio of actual work completed to the percentage of  work planned to hav...
Cost Budgeting                           14• Allocating the project cost estimate to individual  work items over time• Pro...
What are the benefits?   15•   Meeting budget goals.•   Realistic project estimates.•   Earned value Management•   Cost ac...
What are the benefits?                    16• Project is completed within an approved  budget.• Accurate cost estimates an...
How does Primavera help?   17•   Budgeting•   Labor cost•   Earned Value Report•   Cost Variance•   Total Project Costing
How does Primavera help?   18•   Cost Account•   Project Expenses•   Manage Currency•   Budget Summary•   Funding Details
How Does MSP help?   19•   Earned Value management•   Planned and Actual value•   Manage currency•   Project expenses
Pearl river tower   20
21Thank You
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Cost management

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created by Ms. Deepika - Engineer Business Support, PPM

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Cost management

  1. 1. 1COST MANAGEMENT
  2. 2. What is Cost Management? 2• Process of planning and controlling the budget of the project.• Cost management predicts the expenditure and reduce the project from going over budget.
  3. 3. Principles 3• Cash Flow Analysis (Estimated project cost and benefit of project organization).• Tangible Cost (Can be measured)  A task that was allocated ₹150,000 but actually costs ₹100,000 would have a tangible benefit of ₹50,000.• Intangible Cost (Monetary cost)  Research related areas
  4. 4. Principles 4• Direct cost (Directly related to project)  Salary  Purchase of software• Indirect cost (Not directly related to project)  Electricity bill  Telephone bill
  5. 5. Why is it important? 5• Identify each of the costs within your project• Ensure that expenses are approved before purchasing• Keep a central record of all costs incurred• Control the overall cost of your project• Keep your project and financial plans up-to-date
  6. 6. What does it include? 6• Budget• Benefit• Spending• Expenses• Funding• ROI
  7. 7. How is it done in project? 7• Cost Management Plan• Cost Baseline• Activity Cost estimates• Performance Measurements
  8. 8. Cost in Project Management 8 Estimate Cost Determine Budget Control Cost
  9. 9. Estimating Cost 9• Projected cost of a project.• Analogous Estimating• Parametric Estimating• Bottom-up Estimating• Three-point Estimates• Cost of quality
  10. 10. Determine Budget 10• Cost Aggregation• Reserve Analysis• Historical Data• Funding Limit Reconciliation
  11. 11. Control Cost 11• Earned Value Management• Forecasting• To-Complete Performance Index (TCPI)• Variance Analysis• Performance Reviews
  12. 12. Earned Value Analysis 12• Planned Value – Total cost estimate planned to be spent on an activity during a given period• Earned Value – Estimate of the value of the physical work actually completed• Actual Value – Total of direct and indirect costs incurred in accomplishing work on an activity
  13. 13. Rate of Performance 13• Ratio of actual work completed to the percentage of work planned to have been completed at any given time.• For example, suppose the server installation was halfway completed by the end of week 1; the rate of performance would be 50% because by the end of week 1, the planned schedule reflects that the task should be 100% complete and only 50% of that work has been completed.
  14. 14. Cost Budgeting 14• Allocating the project cost estimate to individual work items over time• Provides info for project funding requirements• Estimating costs for each major project activity over time• Used to measure and monitor cost performance
  15. 15. What are the benefits? 15• Meeting budget goals.• Realistic project estimates.• Earned value Management• Cost accounts• Rate of performance
  16. 16. What are the benefits? 16• Project is completed within an approved budget.• Accurate cost estimates and realistic budget.• Return on investment (ROI)
  17. 17. How does Primavera help? 17• Budgeting• Labor cost• Earned Value Report• Cost Variance• Total Project Costing
  18. 18. How does Primavera help? 18• Cost Account• Project Expenses• Manage Currency• Budget Summary• Funding Details
  19. 19. How Does MSP help? 19• Earned Value management• Planned and Actual value• Manage currency• Project expenses
  20. 20. Pearl river tower 20
  21. 21. 21Thank You

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