This document discusses key aspects of project cost management. It addresses estimating costs, budgeting costs to activities, controlling changes to the budget, and considering life-cycle costs and stakeholder needs. Project cost management aims to complete projects within approved budgets while accounting for effects on customer costs.

1. Costs and Cost Management
Project Cost Management includes the
processes required to ensure that the project
is completed within the approved budget.
Project cost management is primarily
concerned with the cost of the resources
needed to complete project activities.
• However, project cost management should
also consider the effect of project decisions on
the cost of using the project’s product.

2. For example, limiting the number of design
reviews may reduce the cost of the project at
the expense of an increase in the customer’s
operating costs.

3. Life-cycle costing
 The broader view of project cost
management is often called life-cycle costing.
Lifecycle costing together with Value
Engineering techniques are used to reduce
cost and time, improve quality and
performance, and optimize the decision-
making.

4. Project cost management
Project cost management will include
additional processes and numerous general
management techniques such as return on
investment, discounted cash flow, payback
analysis, and others.
 Project cost management should consider the
information needs of the project
stakeholders—different stakeholders may
measure project costs in different ways and at
different times.

5. Project Cost Management Process
All processes interact with each other and
with the processes in the other knowledge
areas as well.
Each process may involve effort from one or
more individuals or groups of individuals,
based on the needs of the project.
Each process generally occurs at least once in
every project phase.

6. Project Cost Management Processs
Resource Planning—determining what
resources (people, equipment, materials and
what quantities of each should be used to
perform project activities.
Cost Estimating—developing an
approximation (estimate) of the costs of the
resources needed to complete project
activities.

7. Cost Budgeting—allocating the overall cost
estimate to individual work activities.
Cost Control—controlling changes to the
project budget.

8. Program Management
A coordinated portfolio of projects that
change organizations to achieve benefits of
strategic importance.
Program Management has evolved from the
complexities of the more aspects of Project
Management.
 Program Management engaged on relating
design concepts to the business strategic
vision of the future.

9. Project Management
Program management is the process of
managing multiple on going projects. An
example would be that of designing,
manufacturing and providing support
infrastructure for an automobile make.
Project Management focused on technical
delivery

10. Managing Processes
• As a software project manager, you become
the key player in a software project.
• You not only manager the day-to-day activities
of the project but also ensure that the
software product is delivered on time.
• What makes your role challenging is the
performance of project-related activities
within a specified budget and time constraint.

11. • At the same time, you need to keep the
requirements and specifications of the
customer in mind.
• To deliver expected results, you carry out
three successive processes: studying the
• feasibility of the project, planning to meet the
requirement, and executing the plan.
• These processes can be further broken down
into activities, such as planning, staffing, and
monitoring.

12. • These processes can be further broken down
into activities, such as planning, staffing, and
monitoring.
• You plan and organize the software
development team to complete development
within the stipulated time and budget.
• To do this, you form a team of people who
have the required technical skills.
• Then, you ensure that all activities are carried
out as planned by the relevant people.

13. The primary software
project management areas that you need to
concentrate on include:
• Managing Resources
• Managing Cost
• Managing Risk
• Managing Schedule
• Managing the project plan
• Managing quality

14. Managing Resources
• The primary input required to create software
are resources.
• Resources for a software project may be of
three kinds: human, hardware, "and software.
• Human resource management is about
effectively identifying the people with the
appropriate skills, assigning roles and
responsibilities to these people, and
establishing reporting relationships.

15. • On the other hand, hardware and software
resource management relates to identifying
and ensuring resources such as workstations,
disk space on servers, software tools, and
software licenses.
• To manage resources effectively, there are two
areas that you require your attention. These
include:

16. • Your responsibilities include analyzing
customer requirements, determining the
scope of the software project, allocating
resources top the project, scheduling the
project, and executing the project.
• These responsibilities can be considered in
terms of the areas where management skills
are required.

17. • Management of human resources also
requires efficient team development.
• To manage human resources, you also need to
implement a reward and recognition system.
This helps in promoting and reinforcing
positive performance.

18. Managing Cost
• The cost factor has a considerable influence
on the execution of a software project.
• The budget of a software project is affected by
factors, such as the current orientation of the
organization toward software development,
number of skilled personnel available,
infrastructure, and computer hardware and
software.

19. • The budget can also be influenced by timely
availability of resources.
• If a particular resource is allocated to the
project later than required, the costs involved
could go up drastically.
• To manage costs for software projects, you
need an accurate estimation of costs.
• To do that, there is a sequence of steps that
you need to perform.

20. • Identify the resources required for the project
• • Estimate the cost of each activity
• • Set cost baselines for each activity
• • Implement a control system for cost changes

21. Management Risk
• Risk management is an integral part of project
management.
• Risk on a small scale is acceptable to most
project managers as the element of loss is
minimal.
• Risk management activities involve identifying
potential risks, assessing them, and planning
for contingent actions if a risk materializes.