Skillogic Knowledge Solutions presents PMP Training Material - Cost Management Part 2. If you are looking for PMP Training, then Skillogic is one of the best training centres in India. Classroom training available at Bangalore, Chennai, Mumbai, Hyderabad and Delhi..

1. PMI Project Management
Professional (PMP)® Workshop

2. Project Cost Management
Part 2
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3. Estimate Costs
Inputs
Cost Management Plan gives guidance on how to
manage costs
HR Management Plan gives staffing details
Scope baseline provides scope/WBS details for
which estimates are to be made
Project Schedule, Risk Register, Enterprise
environmental factors and Org. process assets are
the other inputs
Tools & Techniques
Expert Judgment is helpful for planning and
controlling costs
Analogous estimating, Parametric estimating,
Bottom-up estimating, Three-point estimating
and Group Decision making techniques are
different estimation techniques
Reserve Analysis, Cost of Quality and Vendor Bid
Analysis are used in estimation assumptions to
calibrate estimations
PM Software will help to speed up estimation
process to consider various alternatives quickly
• Activity cost estimates
• Basis of estimates
• Project documents updatesOutputs
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4.  Analogous Estimating - also called top-down estimating, which
means using the actual cost of previous, similar project as basis for
estimating the cost of current project. It is a form of expert judgment.
 Parametric Estimating – uses a statistical relationship between
historical data and other variables (e.g. KLOC) to calculate cost
estimate for a schedule activity resource.
 Bottom up Estimating - involves estimating the cost of individual
work items, then summarizing or rolling up the individual estimates to
get a project total.
Estimation Techniques
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5. Estimation Techniques
Analogous Estimating
Advantages Disadvantages
Quick Less Accurate
Less Costly to Create Requires considerable experience to do
well
Bottom-Up Estimating
More Accurate Takes time and expense to do this form
of estimating
Gains buy-in from the team Tendency for the team to pad estimates
Based on a detail analysis of the
project
Requires that the project be defined
and understood
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6. Determine Budget
Inputs
• Cost management
plan
• Scope baseline
• Activity cost
estimates
• Basis of estimates
• Project schedule
• Resource calendars
• Risk register
• Agreements
• Organizational
process assets
Tools&Techniques
• Cost aggregation
• Reserve analysis
• Expert judgment
• Historical
relationships
• Funding limit
reconciliation
Outputs
• Cost baseline
• Project funding
requirements
• Project documents
updates
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7. Determine Budget
Inputs
Cost Management Plan gives guidance on
how to manage and control costs
Scope baseline provides scope/WBS
details.
Activity cost estimates and Basis of
estimates provide activity level estimates
which will be aggregated to get total cost
estimate
Resource Calendars provide resource
assignment info.
Agreements give agreed purchase
decisions.
Project Schedule, Risk Register,
Enterprise environmental factors and
Org. process assets are the other inputs
Tools & Techniques
Cost Aggregation is done from all
individual work package estimates
Expert Judgment and Historical
relationships is helpful for planning and
controlling costs
Reserve Analysis is used to calibrate
estimations
• Cost baseline
• Project funding requirements
• Project documents updatesOutputs
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8. Budget Components
Project
Budget
Cost
Baseline Control
Accounts
Work
Package
Estimates
Activity level
estimates
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Management
Reserve
Contingency
Reserve
Activity
Contingency Reserve

9. In larger projects or programs, its is difficult to do cost
management at each individual activity level and hence costs are
managed at a higher level.
A control account is a summary account in the general ledger,
that supports the balance in the summary account consolidated
from subsidiary ledgers of sub-projects in a project or projects
within a program.
Control Accounts Know the jargon

10. Cost Management Outputs
 Cost Baseline: is a time phased
budget which is used to measure
and monitor cost performance on
the project. It is a summary of
estimated costs by period and
displayed in the form of an S-curve.
 Project Funding Requirements:
Funding requirements, total and
periodic are derived from the cost
baseline and can be established to
exceed, usually by a margin to
allow for either early progress or
cost over run
Expected
Cash flow
Cost
Baseline
Funding
Requirements
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11. • Change requests - may occur in forms of oral or written, direct
or indirect, externally or internally initiated and legally mandated
or optional.
• Changes may require increasing the budget or decreasing it.
• Cost change control system - defines the procedures by which
the cost baseline may be changed. It includes forms,
documentation, tracking systems and approval levels necessary
for authorizing changes.
Control Costs

12. Control costs
Inputs
• Project
management plan
• Project funding
requirements
• Work performance
data
• Organizational
process assets
Tools&Techniques
• Earned value
management
• Forecasting
• To-complete
performance index
(TCPI)
• Performance
reviews
• Project
management
software
• Reserve analysis
Outputs
• Work
performance
information
• Cost forecasts
• Change requests
• Project
management plan
updates
• Project documents
updates
• Organizational
process assets
updates
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13. © 2016 Skillogic Knowledge Solutions. All Rights Reserved13
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