Downloaded 77 times
Uploaded byJody R Flower
Cost management plan
A cost management plan establishes policies and procedures for planning, managing, spending, and controlling project costs. It determines the unit of measure, level of precision and accuracy for cost estimates, and defines organizational procedures, control thresholds, and rules for performance monitoring. The plan also describes techniques for estimating costs such as analogous estimates, parametric estimates, bottom-up estimates and cost of quality assessments. Finally, it is used to establish an authorized cost baseline and budget and to control costs by monitoring the project's status and managing changes to the cost baseline.
Cost management plan
- 1.
- 2. Cost Management Plan “establishesthe policies, procedures, and documentation for planning, managing, expending and controlling project costs.” Project Management Institute. (2004). A guide to the project management body of knowledge (PMBOK guide). Newtown Square, Pa: Project Management Institute.
- 3. Cost Collection Tools Expert Judgement Analytical Techniques Meetings
- 4. Cost Management PlansEstablish Unit of Measure – staff hours, staff days, weeks for time Level of Precision – degree to which activity cost estimates Level of Accuracy – range of cost activities Organizational Procedures Link – work breakdown structure (WBS) Control Thresholds – variances Rules of Performance – earned value management (EVM)
- 5. Estimate Costs Developapproximation from monetary resources needed to complete project activities Cost requirement to complete project activities Predictions based on information provided Refined and reviewed during course of project
- 6. Techniques to EstimateCosts Analogous Estimate – use values such as scope, cost, budget and duration from previous and similar projects. Parametric Estimate – statistical relationship between relevant historical data and other variables. Bottom-Up Estimate – estimate the component of work Cost of Quality (COQ) – cost of good quality and cost of poor quality
- 7. Determine Budget Estimatedcosts of individual activities or work packages Establish authorized cost baselines Includes all the funds authorized to execute the project
- 8. Control Costs “monitor statusof the project to update the project costs and managed changes to the cost baselines.” Project Management Institute. (2004). A guide to the project management body of knowledge (PMBOK guide). Newtown Square, Pa: Project Management Institute.