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PMBoK Discussion #5Project Cost Management<br />Alex Lutsaevsky<br />Ciklum Program Manager/Consultant<br />
Cost Management<br />2<br />www.ciklum.net<br />
Cost Management Plan<br /><ul><li>Can be formal or informal, but included to project management plan
How the estimates are stated and in which currency?
Rules for measuring the cost performance
Reporting formats for cost performance
Models
Control thresholds
Processes description
Direct and indirect costs management, etc.</li></ul>3<br />www.ciklum.net<br />
Estimate Costs<br />
Concepts<br /><ul><li>Life Cycle Costing
Value Analysis
Cost Risk
Variable costs vs. fixed costs
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PMBoK, discussion #5: Project Cost Management

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PMBoK, discussion #5: Project Cost Management

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

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