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Project Management 5 Cost Management

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This is the 5th presentation as part of PM Awareness Sessions I\'ve made for my company\'s (ITEC) staff to increase their awareness of PM best practices.

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Project Management 5 Cost Management

  1. 1. Project Management<br />Cost Management<br />MOHAMMAD K. KIWAN<br />PMO MANAGER<br />IMAGE TECHNOLOGIES<br />Part of Project Management Awareness Sessions<br />
  2. 2. Cost Management<br />It is from Project Management perspective and NOT personal development/management perspective.<br />Cost Management is very analogous to Time Management (because resources’ times are the main cost of the project)<br />August 10, 2009<br />2<br />
  3. 3. The triple constraint<br />Every project is constrained in different ways by its:<br />Scope: What work will be done as part of the project? What unique product, service, or result does the customer or sponsor expect from the project?<br />Time: How long should it take to complete the project? What is the project’s schedule?<br />Cost: What should it cost to complete the project? What is the project’s budget?<br />August 10, 2009<br />3<br />
  4. 4. The triple constraint triangle<br />August 10, 2009<br />4<br />Scope<br />Time<br />Quality<br />Cost<br />
  5. 5. Project Cost Management<br />Project cost management includes the processes required to ensure that a project team completes a project within an approved budget.<br />Cost Management involves Cost Estimating & Cost Budgeting<br />August 10, 2009<br />5<br />
  6. 6. Cost Estimate vs. Cost Budget<br />Cost Estimate: the estimation of all activities and tasks’ costs (mostly resource costs).<br />The techniques are similar to time estimating.<br />Cost budgeting is allocating project cost over time (time-phased budget)<br />August 10, 2009<br />6<br />
  7. 7. Cost Estimation<br />You need to know scope first (including project scope)<br />You should estimate cost for ALL of your work (Planning, PM Activities, meetings, Design, Developments, Quality work, Risk work, Approval, Documentation, Training, Lessons Learned, Traveling, …)<br />August 10, 2009<br />7<br />
  8. 8. Cost Baseline vs. Cost Budget<br />Cost Estimation+ Contingency Reserve = Cost Baseline<br />Cost Baseline + Management Reserve = Cost Budget<br />You should track against cost baseline not cost budget<br />August 10, 2009<br />8<br />
  9. 9. Cost Terms (similar to time)<br />Estimates: Bottom up, top down (analogous), parametric. Also: one point, three point (PERT), estimate with range. Also: ROM, budgetary, Definite.<br />EVM = Earned Value Management<br />EV<br />PV<br />AC<br />August 10, 2009<br />9<br />
  10. 10. Cost Control<br />Cost should be controlled<br />Cost should be baselined<br />Cost overruns should be handled (management approval, cost optimization)<br />Cost/Time/Scope tradeoffs are handled by the PM and/or PS.<br />August 10, 2009<br />10<br />
  11. 11. Questions?<br />August 10, 2009<br />11<br />
  12. 12. Thank You<br />August 10, 2009<br />12<br />

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