CAPM Week 3 Chapter 7

1. Certified Associate Project Management
CAPM® Exam Prep – Week 3
Muzette Charles | mcharles2@pace.edu

2. Time Management
Chapter 6 - Review

3. Time Management
Chapter 6 - Review

4. Time Management
Chapter 6 - Review

5. Cost Management
Chapter 7
“… includes the processes involved in planning, estimating, budgeting, financing, funding,
managing & controlling costs so that the project can be completed within the approved
budget.”
Process Process Group Key Deliverables
7.1 Plan Cost Management Planning Cost Management Plan
7.2 Estimate Costs Planning Activity cost estimates
7.3 Determine Budget Planning Cost Baseline (budget)
7.4 Control Costs Monitoring & Controlling Change Requests

6. Cost Management
Chapter 7
Plan Cost Management
Process 1
Key Points
 Provides guidance on how costs aka budget, will be managed throughout the project
 Aligns with Schedule baseline estimates, units of measure, level of accuracy (+/- %)
 Funding decisions: existing funds, equity or debt

7. Cost Management
Chapter 7
Estimate Costs
Process 2
Key Points
 Developing the monetary cost each activity needed to complete the project
 Cost estimates are a prediction based on info known at a given point in time & is constantly reviewed
 Expected accuracy: initially ROM -25% to +75% , Budget -10% to +25%, Definitive -5% to +10%
 Usually expressed in currency: dollars, euros, yen, etc

8. Cost Management
Chapter 7
Determine Budget
Process 3
Key Points
 Budget: all the calculated funds authorized to execute the project, includes reserves
 Cost baseline: the approved version of the budget, less Management Reserves, used to
measure project’s success
 Reserve Analysis: Contingency Reserve & Management Reserve
 Funding Limit Reconciliation: PM is responsible to not exceed funding limits

9. Cost Management
Chapter 7
Control Costs
Process 4
Key Points
 Earned Value Mgmt: tracks how is your project doing compared to plan
 variances & forecast future performance, cost & completion date
 Performance Measurement Baseline: integrates cost, time & scope to track

10. Cost Management
Chapter 7
Control Costs
Process 4
Project is on Track: .95 < CPI or SPI < 1.10 (Industry Rule)

11. Cost Management
Chapter 7