This document discusses project cost management for information technology projects. It covers planning cost management, estimating costs through various techniques, determining the project budget, controlling costs through earned value management and project portfolio management. It also discusses tools for cost management including project management software.
- Project cost management is important because IT projects often exceed their original cost estimates by significant amounts. Processes like resource planning, cost estimating, budgeting, and earned value management can help control costs.
- There are different types of cost estimates used at various project stages, from rough order of magnitude to definitive estimates. Tools like analogous estimating, bottom-up estimating, and parametric models can aid in creating estimates.
- Cost budgeting allocates the total estimated costs to individual work items. Earned value management integrates scope, schedule, and cost data to measure project performance against the baseline plan.
Information Technology Project Management - part 07Rizwan Khurram
This document summarizes key points from the textbook "Information Technology Project Management, Seventh Edition". It discusses the importance of project cost management and describes the processes of planning cost management, estimating costs, determining budgets, and controlling costs. It emphasizes that IT projects often experience cost overruns and provides examples of government IT project failures that exceeded budgets by billions of dollars. The document also defines important cost management terms and outlines techniques for creating cost estimates and budgets.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through accurate estimates, monitoring performance, and making timely adjustments.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and project portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through accurate estimates, monitoring performance, and making timely adjustments.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and project portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through techniques like EVM and the benefits of portfolio management for cost savings.
This document discusses project cost management for information technology projects. It covers the importance of cost management given the history of cost overruns in IT projects. It describes the basic processes involved in cost estimating, budgeting, and control. It discusses types of cost estimates and methods for preparing estimates. Factors that can contribute to cost overruns are explained. Principles of cost management like life cycle costing, cost of defects, cash flow analysis, and reserves are outlined.
This document provides an overview of the 7th edition of the textbook "Information Technology Project Management". It describes the following key points:
1. The textbook covers overall project integration management frameworks, strategic planning processes, project selection methods, developing project charters and management plans, project execution, monitoring and controlling projects, integrated change control processes, and closing projects.
2. It emphasizes that project managers must coordinate all knowledge areas throughout a project's life cycle to achieve integration.
3. Topics covered in depth include developing project charters and management plans, financial analyses for project selection, monitoring and controlling project work, and managing changes through an integrated change control system.
Information Technology Project Management - part 04Rizwan Khurram
This document provides an overview of the 7th edition of the textbook "Information Technology Project Management". It describes the following key points:
1. The textbook covers overall project integration management frameworks, strategic planning processes, project selection methods, developing project charters and management plans, project execution, monitoring and controlling projects, integrated change control processes, and closing projects.
2. It emphasizes that project managers must coordinate all knowledge areas throughout a project's life cycle to achieve integration.
3. Topics include developing project charters to formally initiate projects, creating comprehensive project management plans, and directing and managing project work according to plans.
- Project cost management is important because IT projects often exceed their original cost estimates by significant amounts. Processes like resource planning, cost estimating, budgeting, and earned value management can help control costs.
- There are different types of cost estimates used at various project stages, from rough order of magnitude to definitive estimates. Tools like analogous estimating, bottom-up estimating, and parametric models can aid in creating estimates.
- Cost budgeting allocates the total estimated costs to individual work items. Earned value management integrates scope, schedule, and cost data to measure project performance against the baseline plan.
Information Technology Project Management - part 07Rizwan Khurram
This document summarizes key points from the textbook "Information Technology Project Management, Seventh Edition". It discusses the importance of project cost management and describes the processes of planning cost management, estimating costs, determining budgets, and controlling costs. It emphasizes that IT projects often experience cost overruns and provides examples of government IT project failures that exceeded budgets by billions of dollars. The document also defines important cost management terms and outlines techniques for creating cost estimates and budgets.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through accurate estimates, monitoring performance, and making timely adjustments.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and project portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through accurate estimates, monitoring performance, and making timely adjustments.
This chapter discusses the importance of project cost management in IT projects. It covers cost estimating, budgeting, and control processes. Key topics include types of cost estimates, earned value management to track project performance, and project portfolio management to prioritize projects and allocate resources. The chapter emphasizes controlling costs through techniques like EVM and the benefits of portfolio management for cost savings.
This document discusses project cost management for information technology projects. It covers the importance of cost management given the history of cost overruns in IT projects. It describes the basic processes involved in cost estimating, budgeting, and control. It discusses types of cost estimates and methods for preparing estimates. Factors that can contribute to cost overruns are explained. Principles of cost management like life cycle costing, cost of defects, cash flow analysis, and reserves are outlined.
This document provides an overview of the 7th edition of the textbook "Information Technology Project Management". It describes the following key points:
1. The textbook covers overall project integration management frameworks, strategic planning processes, project selection methods, developing project charters and management plans, project execution, monitoring and controlling projects, integrated change control processes, and closing projects.
2. It emphasizes that project managers must coordinate all knowledge areas throughout a project's life cycle to achieve integration.
3. Topics covered in depth include developing project charters and management plans, financial analyses for project selection, monitoring and controlling project work, and managing changes through an integrated change control system.
Information Technology Project Management - part 04Rizwan Khurram
This document provides an overview of the 7th edition of the textbook "Information Technology Project Management". It describes the following key points:
1. The textbook covers overall project integration management frameworks, strategic planning processes, project selection methods, developing project charters and management plans, project execution, monitoring and controlling projects, integrated change control processes, and closing projects.
2. It emphasizes that project managers must coordinate all knowledge areas throughout a project's life cycle to achieve integration.
3. Topics include developing project charters to formally initiate projects, creating comprehensive project management plans, and directing and managing project work according to plans.
This document provides an overview of project cost management for information technology projects. It discusses the importance of cost management given the poor track record of IT projects meeting budget goals. The key processes involved in project cost management are cost estimating, cost budgeting, and cost control. Cost estimating involves developing approximations of resource costs, while cost budgeting allocates the total estimate to individual work items. Maintaining cost control involves monitoring costs, managing changes to the budget baseline, and keeping stakeholders informed. Common challenges with cost estimates include being done too quickly, lack of experience, and human bias toward underestimation.
Project cost management involves planning, estimating, budgeting, and controlling costs throughout a project. It includes processes to ensure a project is completed within an approved budget. There are typically cost overruns in IT projects, with an average overrun of 27% found in one study. Cost management techniques include estimating costs using analogous, bottom-up, and parametric methods. Earned value management integrates scope, schedule, and cost data to measure project performance against the baseline plan. Variances in schedule and cost are monitored using metrics like the schedule performance index and cost performance index.
This document discusses project cost management principles and processes. It explains that IT projects often experience cost overruns and provides examples. The key processes for managing costs are estimating costs, determining budgets, and controlling costs. Estimating involves developing cost approximations, while determining budgets allocates the estimate to work items to establish a baseline. Controlling costs involves monitoring performance against the baseline and approving changes. Earned value management is presented as a technique to integrate scope, time and cost data to track project performance.
Understand the importance of project cost Organization.
Explain basic project cost Organization principles, concepts, and terms.
Discuss different types of cost estimates and methods for preparing them.
The document discusses project planning, estimating, and feasibility analysis. It covers determining market feasibility, technical feasibility, financial feasibility, and economic feasibility of a project. Key aspects of feasibility analysis include demand study, technical study, capital cost estimates, profitability analysis, and cost-benefit analysis. Feasibility reports help answer questions about pursuing project objectives and determining if a project is practically possible.
Here are the answers to the pop quiz:
1. B
2. B
3. D
4. 1. Planning cost management
2. Estimating cost
3. Determining the budget
4. Controlling costs
5. A
6. 1. Estimates are done too quickly
2. People lack estimating experience
7. C
8. D
9. A
10. A
The document discusses various topics related to managing software projects, including cost estimation and control, scope management, scheduling, and risk management. It provides information on processes for project management, defining activities and their relationships, estimating activity durations and resource needs, developing project schedules, and controlling changes to maintain the schedule. Key aspects covered are the project management process groups, developing a preliminary scope statement, integrated change control, monitoring project work, and managing conflicts that arise over the life of a project.
This 5-day training module covers project cost estimation and management. Day 1 includes an introduction and learning objectives. Day 2 focuses on the importance of cost management and estimation. Day 3 covers basic principles, tools, and techniques like the Constructive Cost Model. Day 4 involves portfolio management and tools like Earned Value Management. Day 5 is a review and uses software to assist with cost management. The module aims to help participants understand cost processes and speak the financial language needed to manage projects within budget.
Project cost management includes planning, estimating, budgeting, and controlling costs to complete a project within budget. Cost estimating develops cost approximations for project activities using techniques like analogous, bottom-up, and parametric estimating. Cost budgeting aggregates activity cost estimates and establishes a cost baseline. Cost control influences factors creating cost variances and controls changes to the budget.
Project cost management includes planning, estimating, budgeting, and controlling costs to complete a project within budget. Cost estimating develops cost approximations for project activities using techniques like analogous, bottom-up, and parametric estimating. Cost budgeting aggregates activity cost estimates and establishes a cost baseline. Cost control influences factors creating cost variances and controls changes to the budget.
This chapter discusses project integration management, which involves coordinating all aspects of a project throughout its life cycle. It describes strategic planning, project selection methods like financial analysis and weighted scoring, and developing key integration documents like the project charter and scope statement. The chapter also covers developing the project management plan, executing project work, monitoring/controlling, and closing projects. Good integration is key to overall project success.
This chapter discusses project integration management, which involves coordinating all aspects of a project throughout its life cycle. It describes strategic planning, project selection methods like financial analysis and weighted scoring, and developing key integration documents like the project charter and scope statement. The chapter also covers developing the project management plan, executing project work, and monitoring and controlling the project. It emphasizes the importance of leadership, a supportive culture, and tools to successful project execution.
The document discusses key aspects of project integration management including:
1) The importance of project integration management and coordinating all project knowledge areas.
2) How the Airbus A380 project faced integration issues due to software version mismatches.
3) Key project integration processes like developing plans, directing execution, monitoring, and change control.
4) Methods for project selection like NPV, ROI, weighted scoring, and how a project charter and management plan are used.
Project integration management involves coordinating all aspects of a project, including developing a charter, scope statement, and management plan. It also includes executing the project according to plan, monitoring for changes, controlling changes through an approval process, and closing out the project. Software can help with tasks like documentation, tracking, reporting, and integrating all project information. Effective integration is key to the overall success of projects.
] po [ is an open-source project management software that integrates various business functions like CRM, project planning, collaboration, timesheets, and financial controlling. It provides a central repository for all project information and processes to improve project initiation, planning, tracking, resource management, and knowledge sharing. Key features include centralized project data, workflow automation, resource scheduling, timesheet tracking, and financial reporting.
This document provides an overview of project cost management for an IT project management course. It defines key cost management terms and processes including cost estimation, budgeting, and controlling costs. It discusses tools for cost estimation like analogous estimates, bottom-up estimates, and parametric modeling. It also explains earned value management (EVM) as a tool for cost control, defining terms like planned value, earned value, actual cost, and calculating values like cost performance index (CPI) and estimate at completion (EAC).
The document discusses the key processes for project scope management according to the textbook "Information Technology Project Management, Sixth Edition". These include collecting requirements to define project scope, creating a work breakdown structure (WBS) to divide scope into smaller components, verifying scope through formal stakeholder acceptance, and controlling scope changes throughout the project life cycle. The goal of scope management is to ensure a project addresses all necessary work while avoiding scope creep.
This document discusses project scope management based on the textbook "Information Technology Project Management, Sixth Edition". It covers defining project scope by collecting requirements, creating a scope statement and work breakdown structure (WBS), verifying scope is met, and controlling scope changes. The importance of scope management processes is emphasized for defining all required work and deliverables for a project.
The document discusses the importance of project cost management. It notes that projects historically have poor track records for meeting cost goals, with average cost overruns found in various CHAOS studies from 1995 to 2003. Proper project cost management, including processes like resource planning, cost estimating, cost budgeting and cost control, can help reduce cost overruns. The basic principles of cost management, such as distinguishing different types of costs and using techniques like activity-based costing and reserves, are also covered.
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
This document provides an overview of project cost management for information technology projects. It discusses the importance of cost management given the poor track record of IT projects meeting budget goals. The key processes involved in project cost management are cost estimating, cost budgeting, and cost control. Cost estimating involves developing approximations of resource costs, while cost budgeting allocates the total estimate to individual work items. Maintaining cost control involves monitoring costs, managing changes to the budget baseline, and keeping stakeholders informed. Common challenges with cost estimates include being done too quickly, lack of experience, and human bias toward underestimation.
Project cost management involves planning, estimating, budgeting, and controlling costs throughout a project. It includes processes to ensure a project is completed within an approved budget. There are typically cost overruns in IT projects, with an average overrun of 27% found in one study. Cost management techniques include estimating costs using analogous, bottom-up, and parametric methods. Earned value management integrates scope, schedule, and cost data to measure project performance against the baseline plan. Variances in schedule and cost are monitored using metrics like the schedule performance index and cost performance index.
This document discusses project cost management principles and processes. It explains that IT projects often experience cost overruns and provides examples. The key processes for managing costs are estimating costs, determining budgets, and controlling costs. Estimating involves developing cost approximations, while determining budgets allocates the estimate to work items to establish a baseline. Controlling costs involves monitoring performance against the baseline and approving changes. Earned value management is presented as a technique to integrate scope, time and cost data to track project performance.
Understand the importance of project cost Organization.
Explain basic project cost Organization principles, concepts, and terms.
Discuss different types of cost estimates and methods for preparing them.
The document discusses project planning, estimating, and feasibility analysis. It covers determining market feasibility, technical feasibility, financial feasibility, and economic feasibility of a project. Key aspects of feasibility analysis include demand study, technical study, capital cost estimates, profitability analysis, and cost-benefit analysis. Feasibility reports help answer questions about pursuing project objectives and determining if a project is practically possible.
Here are the answers to the pop quiz:
1. B
2. B
3. D
4. 1. Planning cost management
2. Estimating cost
3. Determining the budget
4. Controlling costs
5. A
6. 1. Estimates are done too quickly
2. People lack estimating experience
7. C
8. D
9. A
10. A
The document discusses various topics related to managing software projects, including cost estimation and control, scope management, scheduling, and risk management. It provides information on processes for project management, defining activities and their relationships, estimating activity durations and resource needs, developing project schedules, and controlling changes to maintain the schedule. Key aspects covered are the project management process groups, developing a preliminary scope statement, integrated change control, monitoring project work, and managing conflicts that arise over the life of a project.
This 5-day training module covers project cost estimation and management. Day 1 includes an introduction and learning objectives. Day 2 focuses on the importance of cost management and estimation. Day 3 covers basic principles, tools, and techniques like the Constructive Cost Model. Day 4 involves portfolio management and tools like Earned Value Management. Day 5 is a review and uses software to assist with cost management. The module aims to help participants understand cost processes and speak the financial language needed to manage projects within budget.
Project cost management includes planning, estimating, budgeting, and controlling costs to complete a project within budget. Cost estimating develops cost approximations for project activities using techniques like analogous, bottom-up, and parametric estimating. Cost budgeting aggregates activity cost estimates and establishes a cost baseline. Cost control influences factors creating cost variances and controls changes to the budget.
Project cost management includes planning, estimating, budgeting, and controlling costs to complete a project within budget. Cost estimating develops cost approximations for project activities using techniques like analogous, bottom-up, and parametric estimating. Cost budgeting aggregates activity cost estimates and establishes a cost baseline. Cost control influences factors creating cost variances and controls changes to the budget.
This chapter discusses project integration management, which involves coordinating all aspects of a project throughout its life cycle. It describes strategic planning, project selection methods like financial analysis and weighted scoring, and developing key integration documents like the project charter and scope statement. The chapter also covers developing the project management plan, executing project work, monitoring/controlling, and closing projects. Good integration is key to overall project success.
This chapter discusses project integration management, which involves coordinating all aspects of a project throughout its life cycle. It describes strategic planning, project selection methods like financial analysis and weighted scoring, and developing key integration documents like the project charter and scope statement. The chapter also covers developing the project management plan, executing project work, and monitoring and controlling the project. It emphasizes the importance of leadership, a supportive culture, and tools to successful project execution.
The document discusses key aspects of project integration management including:
1) The importance of project integration management and coordinating all project knowledge areas.
2) How the Airbus A380 project faced integration issues due to software version mismatches.
3) Key project integration processes like developing plans, directing execution, monitoring, and change control.
4) Methods for project selection like NPV, ROI, weighted scoring, and how a project charter and management plan are used.
Project integration management involves coordinating all aspects of a project, including developing a charter, scope statement, and management plan. It also includes executing the project according to plan, monitoring for changes, controlling changes through an approval process, and closing out the project. Software can help with tasks like documentation, tracking, reporting, and integrating all project information. Effective integration is key to the overall success of projects.
] po [ is an open-source project management software that integrates various business functions like CRM, project planning, collaboration, timesheets, and financial controlling. It provides a central repository for all project information and processes to improve project initiation, planning, tracking, resource management, and knowledge sharing. Key features include centralized project data, workflow automation, resource scheduling, timesheet tracking, and financial reporting.
This document provides an overview of project cost management for an IT project management course. It defines key cost management terms and processes including cost estimation, budgeting, and controlling costs. It discusses tools for cost estimation like analogous estimates, bottom-up estimates, and parametric modeling. It also explains earned value management (EVM) as a tool for cost control, defining terms like planned value, earned value, actual cost, and calculating values like cost performance index (CPI) and estimate at completion (EAC).
The document discusses the key processes for project scope management according to the textbook "Information Technology Project Management, Sixth Edition". These include collecting requirements to define project scope, creating a work breakdown structure (WBS) to divide scope into smaller components, verifying scope through formal stakeholder acceptance, and controlling scope changes throughout the project life cycle. The goal of scope management is to ensure a project addresses all necessary work while avoiding scope creep.
This document discusses project scope management based on the textbook "Information Technology Project Management, Sixth Edition". It covers defining project scope by collecting requirements, creating a scope statement and work breakdown structure (WBS), verifying scope is met, and controlling scope changes. The importance of scope management processes is emphasized for defining all required work and deliverables for a project.
The document discusses the importance of project cost management. It notes that projects historically have poor track records for meeting cost goals, with average cost overruns found in various CHAOS studies from 1995 to 2003. Proper project cost management, including processes like resource planning, cost estimating, cost budgeting and cost control, can help reduce cost overruns. The basic principles of cost management, such as distinguishing different types of costs and using techniques like activity-based costing and reserves, are also covered.
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
How to Add Chatter in the odoo 17 ERP ModuleCeline George
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Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Thinking of getting a dog? Be aware that breeds like Pit Bulls, Rottweilers, and German Shepherds can be loyal and dangerous. Proper training and socialization are crucial to preventing aggressive behaviors. Ensure safety by understanding their needs and always supervising interactions. Stay safe, and enjoy your furry friends!
A Strategic Approach: GenAI in EducationPeter Windle
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This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Macroeconomics- Movie Location
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Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Assessment and Planning in Educational technology.pptxKavitha Krishnan
In an education system, it is understood that assessment is only for the students, but on the other hand, the Assessment of teachers is also an important aspect of the education system that ensures teachers are providing high-quality instruction to students. The assessment process can be used to provide feedback and support for professional development, to inform decisions about teacher retention or promotion, or to evaluate teacher effectiveness for accountability purposes.
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Introduction to AI for Nonprofits with Tapp Network
chapter-4 cost mngt.pptx
1.
2. Copyright 2016
Understand the importance of project cost
management
Explain basic project cost management principles,
concepts, and terms
Describe the process of planning cost
management
Discuss different types of cost estimates and
methods for preparing them
Information Technology Project
Management, Eighth Edition 2
3. Copyright 2016
Understand the processes of determining a
budget and preparing a cost estimate for an
information technology (IT) project
Understand the benefits of earned value
management and project portfolio management to
assist in cost control
Describe how project management software can
assist in project cost management
Information Technology Project
Management, Eighth Edition 3
4. Copyright 2016
Cost is a resource sacrificed or foregone to achieve
a specific objective or something given up in
exchange
Costs are usually measured in monetary units like
dollars
Project cost management includes the processes
required to ensure that the project is completed
within an approved budget
Information Technology Project
Management, Eighth Edition 4
5. Copyright 2016
Planning cost management :determining the
policies, procedures, and documentation that will
be used for planning, executing, and controlling
project cost.
Estimating costs: developing an approximation or
estimate of the costs of the resources needed to
complete a project
Determining the budget: allocating the overall
cost estimate to individual work items to establish a
baseline for measuring performance
Controlling costs: controlling changes to the
project budget
Information Technology Project
Management, Eighth Edition 5
7. Copyright 2016
Most members of an executive board better
understand and are more interested in financial
terms than IT terms , so IT project managers must
speak their language
◦ Profits are revenues minus expenditures
◦ Profit margin is the ratio of revenues to profits
◦ Life cycle costing considers the total cost of ownership,
or development plus support costs, for a project
◦ Cash flow analysis determines the estimated annual
costs and benefits for a project and the resulting annual
cash flow
Information Technology Project
Management, Eighth Edition 7
8. Copyright 2016
Tangible costs or benefits are those costs or
benefits that an organization can easily measure in
dollars
Intangible costs or benefits are costs or benefits
that are difficult to measure in monetary terms
Direct costs are costs that can be directly related
to producing the products and services of the
project
Indirect costs are costs that are not directly
related to the products or services of the project,
but are indirectly related to performing the project
Sunk cost is money that has been spent in the
past; when deciding what projects to invest in or
continue, you should not include sunk costs
Information Technology Project
Management, Eighth Edition 8
9. Copyright 2016
Learning curve theory states that when many
items are produced repetitively, the unit cost of
those items decreases in a regular pattern as
more units are produced
Reserves are dollars included in a cost estimate
to mitigate cost risk by allowing for future
situations that are difficult to predict
◦ Contingency reserves allow for future situations that
may be partially planned for (sometimes called known
unknowns) and are included in the project cost baseline
◦ Management reserves allow for future situations that
are unpredictable (sometimes called unknown
unknowns
Information Technology Project
Management, Eighth Edition 9
10. Copyright 2016
The project team uses expert judgment, analytical
techniques, and meetings to develop the cost
management plan
A cost management plan includes:
◦ Level of accuracy and units of measure
◦ Organizational procedure links
◦ Control thresholds
◦ Rules of performance measurement
◦ Reporting formats
◦ Process descriptions
Information Technology Project
Management, Eighth Edition 10
11. Copyright 2016
Project managers must take cost estimates
seriously if they want to complete projects within
budget constraints
It’s important to know the types of cost estimates,
how to prepare cost estimates, and typical
problems associated with IT cost estimates
Information Technology Project
Management, Eighth Edition 11
13. Copyright 2016
Basic tools and techniques for cost estimates:
◦ Analogous or top-down estimates: use the actual cost
of a previous, similar project as the basis for estimating
the cost of the current project
◦ Bottom-up estimates: involve estimating individual work
items or activities and summing them to get a project total
◦ Parametric modeling uses project characteristics
(parameters) in a mathematical model to estimate project
costs
Information Technology Project
Management, Eighth Edition 13
14. Copyright 2016
Estimates are done too quickly
People lack estimating experience
Human beings are biased toward underestimation
Management desires accuracy
Information Technology Project
Management, Eighth Edition 14
15. Copyright 2016
See the text for a detailed example of creating a
cost estimate for the Surveyor Pro project
described in the opening case
Before creating an estimate, know what it will be
used for, gather as much information as possible,
and clarify the ground rules and assumptions for
the estimate
If possible, estimate costs by major WBS
categories
Create a cost model to make it easy to make
changes to and document the estimate
Information Technology Project
Management, Eighth Edition 15
18. Copyright 2016
Cost budgeting involves allocating the project cost
estimate to individual work items over time
The WBS is a required input to the cost budgeting
process since it defines the work items
Important goal is to produce a cost baseline
◦ a time-phased budget that project managers use to
measure and monitor cost performance
Information Technology Project
Management, Eighth Edition 18
20. Copyright 2016
Project cost control includes
◦ Monitoring cost performance
◦ Ensuring that only appropriate project changes are
included in a revised cost baseline
◦ Informing project stakeholders of authorized changes to
the project that will affect costs
Many organizations around the globe have
problems with cost control
Information Technology Project
Management, Eighth Edition 20
21. Copyright 2016
EVM is a project performance measurement
technique that integrates scope, time, and cost data
Given a baseline (original plan plus approved
changes), you can determine how well the project is
meeting its goals
You must enter actual information periodically to
use EVM
More and more organizations around the world are
using EVM to help control project costs
Information Technology Project
Management, Eighth Edition 21
22. Copyright 2016
The planned value (PV), formerly called the budgeted
cost of work scheduled (BCWS), also called the budget,
is that portion of the approved total cost estimate planned
to be spent on an activity during a given period
Actual cost (AC), formerly called actual cost of work
performed (ACWP), is the total of direct and indirect
costs incurred in accomplishing work on an activity
during a given period
The earned value (EV), formerly called the budgeted
cost of work performed (BCWP), is an estimate of the
value of the physical work actually completed
EV is based on the original planned costs for the project
or activity and the rate at which the team is completing
work on the project or activity to date
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Rate of performance (RP) is the ratio of actual
work completed to the percentage of work planned
to have been completed at any given time during
the life of the project or activity
Brenda Taylor, Senior Project Manager in South
Africa, suggests this term and approach for
estimating earned value
For example, suppose the server installation was
halfway completed by the end of week 1. The rate
of performance would be 50% because by the end
of week 1, the planned schedule reflects that the
task should be 100 percent complete and only 50
percent of that work has been completed
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Negative numbers for cost and schedule variance
indicate problems in those areas
CPI and SPI less than 100% indicate problems
Problems mean the project is costing more than
planned (over budget) or taking longer than
planned (behind schedule)
The CPI can be used to calculate the estimate at
completion (EAC)—an estimate of what it will
cost to complete the project based on
performance to date. The budget at completion
(BAC) is the original total budget for the project
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Many organizations collect and control an entire
suite of projects or investments as one set of
interrelated activities in a portfolio
Five levels for project portfolio management
1. Put all your projects in one database
2. Prioritize the projects in your database
3. Divide your projects into two or three budgets based on
type of investment
4. Automate the repository
5. Apply modern portfolio theory, including risk-return tools
that map project risk on a curve
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Schlumberger saved $3 million in one year by
organizing 120 information technology projects into a
portfolio
Reduced redundant projects and coordinated those
with overlap
IT projects can be huge investments, so it makes
sense to view them as portfolios and track their
progress as a whole
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Spreadsheets are a common tool for resource
planning, cost estimating, cost budgeting, and cost
control
Many companies use more sophisticated and
centralized financial applications software for cost
information
Project management software has many cost-
related features, especially enterprise PM
software
Portfolio management software can help reduce
costs
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Project cost management is a traditionally weak
area of IT projects, and project managers must
work to improve their ability to deliver projects
within approved budgets
Main processes include
◦ Plan cost management
◦ Estimate costs
◦ Determine the budget
◦ Control costs
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