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PMBoK, discussion #5: Project Cost Management
This document discusses key aspects of project cost management including creating a cost management plan, estimating costs, determining the budget, establishing a cost baseline, controlling costs using earned value management, and forecasting. It describes estimating direct and indirect costs, developing a cost baseline by aggregating activity estimates plus reserves, calculating variances and performance indices to measure cost and schedule performance, and forecasting the estimated cost at completion using different methods.
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PMBoK, discussion #5: Project Cost Management
- 1. PMBoK Discussion #5ProjectCost ManagementAlex LutsaevskyCiklum Program Manager/Consultant
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- 3. Cost Management PlanCanbe formal or informal, but included to project management plan
- 4. How the estimatesare stated and in which currency?
- 5. Rules for measuringthe cost performance
- 6. Reporting formats forcost performance
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- 10. Direct and indirectcosts management, etc.3www.ciklum.net
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- 15. Variable costs vs.fixed costs
- 16. Direct vs. indirectcosts
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- 19. Estimate CostsEstimated directcosts, quality efforts, risk efforts, operational costs.6www.ciklum.net
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- 21. Determine BudgetAggregating theestimated costs of individual activities to establish a cost baseline.+Reserves=Cost baseline8www.ciklum.net
- 22. Cost BaselineCost performancebaseline is a time-phased budget used to measure, monitor and control cost performance over the project.9www.ciklum.net
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- 24. Earned Value ManagementPlannedValue, Earned Value, Actual Costs
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- 28. VariancesCV (Cost Variance):difference between the budgeted cost of an activity and the actual cost of that activity.CV = EV – ACSV (Schedule Variance): difference between the scheduled completion of an activity and the actual completion of the activity.SV = EV – PV
- 29. Performance IndicesCPI (CostPerformance Index): The cost-efficiency factor representing the relationship between the actual costs expended and the value of the physical work performed.CPI = EV/ACSPI (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/PV14www.ciklum.net
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- 31. Forecasted Estimate atCompletion (EAC) at the budgeted rateEAC = BAC + AC – EVForecasted Estimate at Completion (EAC) at the present CPI EAC = BAC / CPITo-Complete Performance Index (TCPI) – projection of cost performance that must be achieved on the remaining to meet a specified goal(BAC – EV) / (BAC – AC)15www.ciklum.net
Editor's Notes
- #2 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
- #5 Funding requirements – “triggers” to fund the project.
- #6 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
- #7 Funding requirements – “triggers” to fund the project.
- #8 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
- #9 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
- #10 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