project management

1. PROJECT COST
MANAGEMENT
D R S I T I H A R Y A N I
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2. Introduction
Project Cost Management is defined as the
process of planning and controlling the
cost and budget effectively and efficiently. It
defines what costs are required for each
deliverable of the project. It includes various
functions of Project management like
estimation, job controls, field data collection,
scheduling, accounting, design etc.
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3. WHAT IS COST ESTIMATION & BUDGETING
• The objective of Cost Estimation is to
understand all the resources and the
associated costs needed to deliver the
project satisfactorily. Budgeting assigns a
constraint in terms of the total amount
that the project could spend.
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4. cost of the project can be estimated from various process
sources:
Creating Work Breakdown Structure (WBS)
Develop Schedule
Plan human resources
Identifying risks
The inputs of cost management include,
Project management plan
Project charter
Enterprise environmental factors
Organizational process assets
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5. The output of this is
Cost Management Plan.
Creating estimation and costing for project is an extremely crucial part of any project management.
Various things are taken in consideration while calculating budget for project like labor costs,
necessary equipment acquisition, material costs, etc.

6. CATEGORIESS OF COST
To estimate the cost of project you must categorize various cost types into
categories
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•Labor cost
•Equipment cost
•Cost of supplies
•Travel cost
•Training cost
•Overhead cost, etc.

7. Techniques used to estimate project cost
Analogous Estimating
This estimating technique is based on expert judgments and information based on
previous projects. Where previously done similar project cost is considered with plus or
minus of 20% for existing project.
Parametric estimating
Past data or record is used to estimate cost for the current project.
Bottom-up estimating
Once you have defined the scope of the project, it is the most reliable form of technique.
In this technique, based on WBS, you estimate the cost for each resource or deliverables.
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8. The project budgeting is performed in parallel with the project
scheduling process. It is highly dependent on three component –
•Cost estimation
•Task durations
•Allocated resources