Cost management involves planning and controlling a project's budget to help ensure it is completed within approved funding. It includes processes like resource planning, cost estimating, cost budgeting, and cost control. Resource planning determines what resources like people, equipment, and materials are needed. Cost estimating develops cost approximations for project activities. Cost budgeting allocates overall estimates to specific work items to establish a cost baseline. Cost control monitors performance against the baseline and manages any changes to keep costs on track. Maintaining and improving productivity is important for cost management and completing projects successfully within budget.

2. Topic
COST MANAGEMENT
And productivity

3. Muhammad Asif
13083122-023

4. What is Cost Management?
 Process of planning and controlling the budget of
the project
 Cost management predicts the expenditure and
reduce the project from going over budget.

5. Types of Costs and Benefits
 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

6. Types of Costs and Benefits
 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

7. COST MANAGEMENT
 Includes processes required to ensure that
the project is completed within the approved
budget.
 Processes involved are:
1- Resource Planning
2- Cost Estimating
3- Cost Budgeting
4- Cost Control

8. 1- Resource Planning
Involves determining what physical
resources (people, equipment, materials etc)
and what quantities of each should be used
to perform project activities.

9. Inputs to Resource Planning
1. Work Breakdown Structure:
A deliverable-oriented grouping of project
elements that organizes and defines the
total scope of the project. It Identifies the
project elements that will need resources.
2. Historical Information
3. Scope Statement:
Contains the project justification and the
project objectives.

10. Inputs to Resource Planning
4. Resource Pool Description:
Knowledge of what resources are
potentially available.
5. Organizational Policies:
The policies of the performing organization
regarding staffing and the rental or
purchase of supplies and equipment.

11. Inputs to Resource Planning
 Expert Judgment
Expert judgment, guided by historical
information, provides valuable insight about
the environment and information from prior
similar projects. Expert judgment can also be
used to determine whether to combine
methods of estimating and how to reconcile
differences between them.

12. Tools and Techniques to Resource Planning
1.Alternative identifications:
To adopt different approaches
for the same problem.

13. Outputs from Resource Planning
1. Resource Requirements:
Description of what types of resources
are required and in what quantities for
each element of the work break down
structure.

14. Cost Estimating
 Developing an approximation (estimates) of
the costs of the resources needed to
complete project activities.
 Includes identifying and considering various
costing alternatives.

15. Inputs to Cost Estimating
1. Work Breakdown Structure
2. Resource Requirement
3. Resource Rates
4. Activity Duration Estimates
5. Historical Information

16. Hassan Sardar Ali
13083122-037

17. Tools and Techniques for Cost Estimating
 Analogous Estimating / Top-down Estimating:
Using the actual cost of a previous, similar
project as the basis for estimating the cost of
the current project. It is less costly but less
accurate. (Rough-cost Estimate)
 Parametric Modeling:
Using project characteristics (parameters) in
a mathematical model to predict project
costs.

18. Tools and Techniques for Cost Estimating
 Bottom-up Estimating:
Estimating the cost of individual work
items, then summarizing or rolling up the
individual estimates to get a project title.
(Detailed Estimate)
 Computerized Tools:
Use of computerized tools such as
project management software and
spreadsheets to assist with cost estimating.

19. Outputs from Cost Estimating
 Cost Estimates
 Supporting Details like Scope of work,
Calculation sheet, Assumptions made,
Possible range of results, etc.
 Cost Management Plan describing how cost
variances will be managed.

20. Cost Budgeting
Allocation of overall cost estimates to
individual work items in order to establish a
cost baseline for measuring project
performances.

21. Inputs to Cost Budgeting
 Cost Estimates
 Work Breakdown Structure
 Project Schedule

22. Tools and Techniques for Cost Budgeting
Tools and Techniques for developing project
Cost Estimates are used to develop budgets
for work items as well

23. Outputs from Cost Budgeting
 Cost Baseline
A time-phased budget that will be used to
measure and monitor cost performance
on the project. It is developed by
summing estimated costs by period and
is usually displayed in the form of an S-
curve.

24. Cost Control
Cost Control is concerned with
(a) Influencing the factors which create
changes to the cost baseline to ensure that
changes are beneficial.
(b) Determining that the cost baseline has
changed
(c) Managing the actual changes when and
as they occur

25. Inputs to Cost Control
 Cost Baseline
 Performance Reports
Provide information about cost performance
such as which budgets have been met and
which have not. It also alerts the project team
to issues which may cause problems in the
future.

26. Inputs to Cost Control
 Change Requests
These may occur in many forms-oral or
written, direct or indirect, externally or
internally initiated, and legally mandated
or optional. These may require increasing
the budget or may allow decreasing it.

27. Tools and Techniques for Cost Control
 Cost Change Control System
It defines the procedures by which the cost
baseline may be changed. It includes the
paperwork, tracking systems, and approval
levels necessary for authorizing changes.
 Performance Measurement
It helps to assess the magnitude of any
variations which do occur.

28. Tools and Techniques for Cost Control
 Additional Planning
Perspective changes may require new or
revised cost estimates or analysis of
alternate approaches.
 Computerized Tools

29. Outputs from Cost Control
 Revised Cost Estimates
 Budget Updates
 Corrective Action
 Lessons Learned

30. OBJECTS OF COST CONTROL
1 – To have a knowledge of the profit and loss of the
project throughout the duration of the project.
2 – To have a comparison between the actual project
performance and that conceived in the original
project plan.
3 – Provides feedback data on actual project
performance to future project planning

31. Khalid Rehan
13083122-032

32. PRODUCTIVITY
“Productivity is the output of any production process,
per unit of input.”
OR
“Productivity is the ratio of output and input in any
organization.”
Productivity = Output
Input
Output: is in the form of product quantity and
Input: is in the form of resources.

33. Continue……
The resources are in the form of
 Land acquired
 Salaries paid to employees
 Amount paid to purchase material
 Amount spent in infrastructure

34. Measurement of productivity
 Productivity can be measured, The amount of output per
unit of input.
 To increase productivity means to produce more with
less.
 In factories and corporations, productivity is a measure
of the ability to create goods and services from a given
amount of labour, capital, materials, land, resources,
knowledge, time or any combination of those.
 While in service industry, might be measured based on
the income generated by an employee divided by
his/her salary.

35. Examples
Case A:
10 products are made by
spending 1000 rupees and
case B:
15 products made by spending 2000 rupees.
Productivity in case A = 10 / 1000=0.01
Productivity in case of B = 15 / 2000=0.0075
Result:
In case B, it is an indication of reduced
productivity.

36. Shoaib Hassan
13083122-006

37. Types Of Productivity

38. Types of productivity

39. Partial Productivity
 The resources of productivity when measured
separately are called partial productivity.
 “Apple to Apple” comparison.

40. Example….. #
S.No
.
Input factor Rs .in millions
1. No. of employees 3000 numbers
2. Employee cost 4000
3. Capital employed 500
4. Energy consumed 400
5. Number of client dealt with 35 numbers
6. Number of new clients added 5 numbers
7. Number of computer used (material cost) 2000 numbers
8. Other expenditure 50
Output 10000

41. Total Productivity
 The method of calculating productivity
considering all the resources is called total
productivity.
 Innovated by David j. Sumanth.
 It is systematic and qualitative approach to
compete in quality, price and Time.

42. Total Productivity
Total productivity provides
systematic framework and
structure to an organization
and increase profitability.

43. BENEFITS OF PRODUCTIVITY
Increase in income/profitability.
Lowering running cost/operational costs.
Maximizing the use of all of the company’s resources
 such as land, equipments/machineries, factory,
workers, and etc.

44. Productivity Benefits
 Gaining a greater share of the market.
 More cash flows mean more opportunity for the
company to expand and grow.

45. Factors effect Productivity

46. THANK YOUTHANK YOU