SlideShare a Scribd company logo
www.wizardea.com | contact@wizardea.com
B. M. Shahrier Majumder, PMP
PMP® Exam Preparation
Project Cost Management
www.wizardea.com | contact@wizardea.com
Learning Objectives
Upon completion of this topic you will learn about
– The processes, activities and documentation items for Project Cost
Management
– Elements (and deliverables) for Project Cost Management
– Tools and techniques of the key activities of the Project Cost
Management
3
www.wizardea.com | contact@wizardea.com
Cost Management
Project Cost Management includes the processes involved in planning,
estimating, budgeting and controlling costs so that the project can be
completed within the approved budget.
4
www.wizardea.com | contact@wizardea.com
Key Activities of Cost Management
• Estimate Cost: The process of developing an approximation of the
monetary resources needed to complete project activities.
• Determine Budget: The process of aggregating the estimated costs of
individual activities or work packages to establish an authorized cost
baseline.
• Control Cost: The process of monitoring the status of the project to
update the project budget and managing changes to the cost baseline.
5
www.wizardea.com | contact@wizardea.com
Estimate Cost | Data Flow Diagram
www.wizardea.com | contact@wizardea.com
Estimate Cost
Inputs Tools & Techniques Outputs
Scope baseline
Project schedule
Human resource Plan
Risk register
Enterprise environmental
factors
Organizational process
assets
Expert judgment
Analogous estimating
Parametric estimating
Bottom-up estimating
Three point estimating
Reserve analysis
Cost of quality
Project management
estimating software
Vendor bid analysis
Activity cost estimates
Basis of estimates
Project document updates
www.wizardea.com | contact@wizardea.com
Estimate > Inputs
 Enterprise Environmental Factors
 Market place condition
 Commercial database
 Organizational Process Assets
 Cost estimating policies
 Cost estimating templates
 Historical information
 Project knowledge database
 Lesson learn database
8
www.wizardea.com | contact@wizardea.com
Estimate Cost > Tools and Techniques
• Bottom-up estimating
• Estimates made at the work-package of the WBS and rolled up
• Very accurate
• Needs sufficient information to make an accurate estimate
• Vendor Bid Analysis
• Analysis of what the project should cost, based on the responsive bids
from qualified vendors. Where project are awarded to a vendor under
competitive processes , additional cost estimating work can be
required of the project team to examine the price of individual
deliverables and to deliver the cost that supports the final total project
cost.
9
www.wizardea.com | contact@wizardea.com
Determine Budget | Data Flow Diagram
www.wizardea.com | contact@wizardea.com
Determine Budget
Inputs Tools & Techniques Outputs
Activity cost estimates
Basis of estimates
Scope baseline
Project schedule
Resources calendars
Contract
Organization process
assets
Cost aggregation
Reserve analysis
Expert judgment
Historical relationships
Funding limit reconciliation
Cost performance baseline
Project funding
requirements
Project document updates
www.wizardea.com | contact@wizardea.com
Determine Budget > Tools and Techniques
• Cost Aggregation
12
www.wizardea.com | contact@wizardea.com
Determine Budget > Tools and Techniques
• Funding Limit Reconciliation
• The expenditure of funds should be reconciled with any funding
limit of the commitment of funds for the project.
• A variance between funding limits and the planed expenditures
will sometimes necessitate the rescheduling of work to level out
the rate of expenditures.
13
www.wizardea.com | contact@wizardea.com
Determine Budget > Outputs
• Cost Performance Baseline
– A time-phased budget that is used
to measure and monitor cost
performance on a project
– The approved cost estimates
– Displayed graphically as
cumulative costs over time
– Displayed as an S-Curve
14
• Funding Requirements
– Total and periodic funding
requirements, are derived from
the cost baseline and can
established to exceed, usually by
a margin to allow for either early
progress or cost overrun.
www.wizardea.com | contact@wizardea.com
Control Costs
www.wizardea.com | contact@wizardea.com
Control Costs
Inputs Tools & Techniques Outputs
Project management plan
Project funding
requirements
Work performance
information
Organizational process
assets
Eared value management
Forecasting
To complete performance
index
Performance reviews
Variance analysis
Project management
software
Work performance
measurements
Budget forecasts
Organizational process
assets updates
Change requests
Project management plan
updates
Project document updates
www.wizardea.com | contact@wizardea.com
Control Cost > Tools and Techniques
• Earned Value Management (EVM)
• EVM in its various forms is a commonly used method of
performance measurement. It integrates project scope, cost and
schedule measures to help project management team assess
an measure project performance and progress.
• EVM develops and monitors three key dimensions of each work
package and control account. These are Planned Value (PV),
Earned Value (EV) and Actual Cost (AC).
17
www.wizardea.com | contact@wizardea.com
Control Cost > Tools and Techniques
• Terms to be remember:
18
Abbr. Name Formula
BAC Budget at Completion How much did we budget for the TOTAL project effort?
PV Planned Value What is the estimated value of the work planned to be done as
of now?
EV Earn Value What is the estimated value of the work actually accomplished
as of now?
AC Actual Cost What is the actual cost incurred for the work accomplished?
CV Cost Variance Currently project is over budgeted or under budgeted?
SV Schedule Variance Currently project is ahead of schedule or behind of schedule?
CPI Cost Performance Index How much worth of work we are getting out of every $1 spent.
SPI Schedule Performance Index What is our progress at percent of the rate originally planned?
EAC Estimate at Completion What do we currently expect the TOTAL project to cost?
VAC Variance at Completion How much over or under budget do we expect to be at the end
of the project?
ETC Estimate to Complete From this point of now, how much more do we expect it to cost
to finish the project?
www.wizardea.com | contact@wizardea.com
Control Cost > Tools and Techniques
• Earned Value Analysis
19
Abbr. Name Formula Good Bad
EV Earn Value BAC x Percent Complete NA NA
PV Planned Value BAC x Percent Duration NA NA
CV Cost Variance EV-AC +ve -ve
SV Schedule Variance EV-PV +ve -ve
CPI Cost Performance Index EV/AC >1 <1
SPI Schedule Performance Index EV/PV >1 <1
CV% Cost Variance Percentage CV/EV +ve -ve
SV% Schedule Variance Percentage SV/PV +ve -ve
EAC Estimate at Completion BAC/CPI <BAC >BAC
VAC Variance at Completion BAC-EAC +ve -ve
ETC Estimate to Complete EAC-AC NA NA
www.wizardea.com | contact@wizardea.com
Control Cost > Tools and Techniques
• Exercise
– Total Budget = $2975
– % Duration complete: 60%
– % Complete = 59%
– Actual Cost = 1575
– Find out the all values as per EVM formula table.
20
www.wizardea.com | contact@wizardea.com
Project Selection Method
• Present Value
• Net Present Value
• IRR (Internal Rate of Return): The rate at which the project inflows
(revenue) and outflows (cost) are equal.
• Payback Period
• Benefit Cost Ratio
21
www.wizardea.com | contact@wizardea.com
Cost Management > Some Important Definition
• Present Value: The value of future cash flows
– Formula (PV = (FV/(1+r)n [ Here, PV = Present Value, FV =
Future Value, r = Interest Rate, n = Number of time periods]
• Net Present Value: The difference between the present value of
cash inflows and the present value of cash outflows.
• IRR (Internal Rate of Return): The rate at which the project inflows
(revenue) and outflows (cost) are equal.
22
www.wizardea.com | contact@wizardea.com
Cost Management > Some Important Definition
• Payback Period: The number of time periods it takes to recover your
investment in the project before you start accumulating profit.
• Benefit Cost Ratio: Benefit cost ratio > 1 means the benefits are
grater than the costs.
• Sunk Cost: Money already spent and permanently lost.
23
www.wizardea.com | contact@wizardea.com
Questions
24
• [mail.shahrier@gmail.com]
• http://bd.linkedin.com/in/shahrier

More Related Content

What's hot

PMBoK, discussion #5: Project Cost Management
PMBoK, discussion #5: Project Cost ManagementPMBoK, discussion #5: Project Cost Management
PMBoK, discussion #5: Project Cost Management
Oleksandr Lutsaievskyi
 
Earned value management
Earned value managementEarned value management
Earned value management
Ashif AR
 
Project Cost Management
Project Cost ManagementProject Cost Management
Project Cost Management
Serdar Temiz
 
Session 9 4th edition PMP
Session 9 4th edition PMPSession 9 4th edition PMP
Session 9 4th edition PMP
محمد عصمت عبد الرازق
 
160155061 project-monitoring-control
160155061 project-monitoring-control160155061 project-monitoring-control
160155061 project-monitoring-control
eidalin95
 
4. project cost management
4. project cost management4. project cost management
4. project cost management
Mohamed Salah Eldien Mohamed Ali
 
Project Monitoring and Controlling Processes
Project Monitoring and Controlling ProcessesProject Monitoring and Controlling Processes
Project Monitoring and Controlling Processes
Nishant Munjal
 
Back to basics - Earned Value Management for beginners webinar
Back to basics - Earned Value Management for beginners webinarBack to basics - Earned Value Management for beginners webinar
Back to basics - Earned Value Management for beginners webinar
Association for Project Management
 
Earned Value Analysis
Earned Value AnalysisEarned Value Analysis
Earned Value Analysis
David Edgeworth
 
Project cost control
Project cost controlProject cost control
Project cost control
Sourabh Modgil
 
Earned Value Analysis
Earned Value AnalysisEarned Value Analysis
Earned Value Analysis
Ahmed Rami Elsherif, PMP, ITBMC
 
Earned Value Management Essentials
Earned Value Management EssentialsEarned Value Management Essentials
Earned Value Management Essentials
Glen Alleman
 
Melbourne streamlining earned value with hd published
Melbourne streamlining earned value with hd publishedMelbourne streamlining earned value with hd published
Melbourne streamlining earned value with hd published
InSync Conference
 
Projects Performance Analysis & Forecasting
Projects Performance Analysis & Forecasting Projects Performance Analysis & Forecasting
P ex cost management-1
P ex cost management-1P ex cost management-1
P ex cost management-1
AHMED NADIM JILANI
 
Earned value analysis - presentation
Earned value analysis  -  presentationEarned value analysis  -  presentation
Earned value analysis - presentation
ProPM Academy
 
Earned Value Management
Earned Value ManagementEarned Value Management
Earned Value Management
Anand Subramaniam
 
project control using earned value analysis - Part 01
project control using earned value analysis - Part 01 project control using earned value analysis - Part 01
project control using earned value analysis - Part 01
waleed hamdy
 
Earned Value Analysis
Earned Value AnalysisEarned Value Analysis
Earned Value Analysis
Saqib Raza
 
PMP COST FORMULAE
PMP COST FORMULAEPMP COST FORMULAE
PMP COST FORMULAE
Bhaskara Reddy Sannapureddy
 

What's hot (20)

PMBoK, discussion #5: Project Cost Management
PMBoK, discussion #5: Project Cost ManagementPMBoK, discussion #5: Project Cost Management
PMBoK, discussion #5: Project Cost Management
 
Earned value management
Earned value managementEarned value management
Earned value management
 
Project Cost Management
Project Cost ManagementProject Cost Management
Project Cost Management
 
Session 9 4th edition PMP
Session 9 4th edition PMPSession 9 4th edition PMP
Session 9 4th edition PMP
 
160155061 project-monitoring-control
160155061 project-monitoring-control160155061 project-monitoring-control
160155061 project-monitoring-control
 
4. project cost management
4. project cost management4. project cost management
4. project cost management
 
Project Monitoring and Controlling Processes
Project Monitoring and Controlling ProcessesProject Monitoring and Controlling Processes
Project Monitoring and Controlling Processes
 
Back to basics - Earned Value Management for beginners webinar
Back to basics - Earned Value Management for beginners webinarBack to basics - Earned Value Management for beginners webinar
Back to basics - Earned Value Management for beginners webinar
 
Earned Value Analysis
Earned Value AnalysisEarned Value Analysis
Earned Value Analysis
 
Project cost control
Project cost controlProject cost control
Project cost control
 
Earned Value Analysis
Earned Value AnalysisEarned Value Analysis
Earned Value Analysis
 
Earned Value Management Essentials
Earned Value Management EssentialsEarned Value Management Essentials
Earned Value Management Essentials
 
Melbourne streamlining earned value with hd published
Melbourne streamlining earned value with hd publishedMelbourne streamlining earned value with hd published
Melbourne streamlining earned value with hd published
 
Projects Performance Analysis & Forecasting
Projects Performance Analysis & Forecasting Projects Performance Analysis & Forecasting
Projects Performance Analysis & Forecasting
 
P ex cost management-1
P ex cost management-1P ex cost management-1
P ex cost management-1
 
Earned value analysis - presentation
Earned value analysis  -  presentationEarned value analysis  -  presentation
Earned value analysis - presentation
 
Earned Value Management
Earned Value ManagementEarned Value Management
Earned Value Management
 
project control using earned value analysis - Part 01
project control using earned value analysis - Part 01 project control using earned value analysis - Part 01
project control using earned value analysis - Part 01
 
Earned Value Analysis
Earned Value AnalysisEarned Value Analysis
Earned Value Analysis
 
PMP COST FORMULAE
PMP COST FORMULAEPMP COST FORMULAE
PMP COST FORMULAE
 

Similar to PMP Exam Preparation Course: 06 Project Cost Management

A brief on project cost management
A brief on project cost managementA brief on project cost management
A brief on project cost management
Imran Jamil
 
projectcostcontrol-130625012804-phpapp02 (1)
projectcostcontrol-130625012804-phpapp02 (1)projectcostcontrol-130625012804-phpapp02 (1)
projectcostcontrol-130625012804-phpapp02 (1)
Nita Cristian
 
6- PMP Training - Cost Management
6- PMP Training - Cost Management6- PMP Training - Cost Management
6- PMP Training - Cost Management
Qais Ur Rehman Rasooli, PMP
 
EVA - Metrics.ppt
EVA - Metrics.pptEVA - Metrics.ppt
EVA - Metrics.ppt
NivethaSampath3
 
2.07 cost management 1
2.07 cost management 12.07 cost management 1
2.07 cost management 1
reddvise
 
Group 12 - Progress and Performance Measurement and Evaluation.pdf
Group 12 - Progress and Performance Measurement and Evaluation.pdfGroup 12 - Progress and Performance Measurement and Evaluation.pdf
Group 12 - Progress and Performance Measurement and Evaluation.pdf
alvieramada23
 
Topic 10 - Project Performance Management.pdf
Topic 10 - Project Performance Management.pdfTopic 10 - Project Performance Management.pdf
Topic 10 - Project Performance Management.pdf
HuyNguyen657394
 
COST MANAGEMENT REPORT
COST MANAGEMENT REPORT COST MANAGEMENT REPORT
COST MANAGEMENT REPORT
Jo Balucanag - Bitonio
 
07 projectcostmanagement
07 projectcostmanagement07 projectcostmanagement
07 projectcostmanagement
Dhamo daran
 
CostManagementSlides.pdf
CostManagementSlides.pdfCostManagementSlides.pdf
CostManagementSlides.pdf
AmrishTyagi8
 
Bridging the cost schedule divide - integrating primavera and cost systems ppt
Bridging the cost schedule divide - integrating primavera and cost systems pptBridging the cost schedule divide - integrating primavera and cost systems ppt
Bridging the cost schedule divide - integrating primavera and cost systems ppt
p6academy
 
PMP Module 4 - Cost
PMP Module 4 - CostPMP Module 4 - Cost
PMP Module 4 - Cost
Cybrary
 
4- Project Cost Management.ppt
4- Project Cost Management.ppt4- Project Cost Management.ppt
4- Project Cost Management.ppt
MohamadAGhareb
 
Project Management: Cost Management Knowledge Area
Project Management: Cost Management Knowledge AreaProject Management: Cost Management Knowledge Area
Project Management: Cost Management Knowledge Area
Joshua Render
 
Quality metrics in project management
Quality metrics in project managementQuality metrics in project management
Quality metrics in project management
selinasimpson1601
 
8.project cost management
8.project cost management8.project cost management
8.project cost management
Chanwit Julrod
 
Project Management.pptx
Project Management.pptxProject Management.pptx
Project Management.pptx
Yogesh Singh
 
Lecture 06 project_cost_management
Lecture 06 project_cost_managementLecture 06 project_cost_management
Lecture 06 project_cost_management
Sayed Ahmed
 
07.cost management updated
07.cost management updated07.cost management updated
07.cost management updated
Shraddha PMP
 
PMP Training - 07 project cost management
PMP Training - 07 project cost managementPMP Training - 07 project cost management
PMP Training - 07 project cost management
ejlp12
 

Similar to PMP Exam Preparation Course: 06 Project Cost Management (20)

A brief on project cost management
A brief on project cost managementA brief on project cost management
A brief on project cost management
 
projectcostcontrol-130625012804-phpapp02 (1)
projectcostcontrol-130625012804-phpapp02 (1)projectcostcontrol-130625012804-phpapp02 (1)
projectcostcontrol-130625012804-phpapp02 (1)
 
6- PMP Training - Cost Management
6- PMP Training - Cost Management6- PMP Training - Cost Management
6- PMP Training - Cost Management
 
EVA - Metrics.ppt
EVA - Metrics.pptEVA - Metrics.ppt
EVA - Metrics.ppt
 
2.07 cost management 1
2.07 cost management 12.07 cost management 1
2.07 cost management 1
 
Group 12 - Progress and Performance Measurement and Evaluation.pdf
Group 12 - Progress and Performance Measurement and Evaluation.pdfGroup 12 - Progress and Performance Measurement and Evaluation.pdf
Group 12 - Progress and Performance Measurement and Evaluation.pdf
 
Topic 10 - Project Performance Management.pdf
Topic 10 - Project Performance Management.pdfTopic 10 - Project Performance Management.pdf
Topic 10 - Project Performance Management.pdf
 
COST MANAGEMENT REPORT
COST MANAGEMENT REPORT COST MANAGEMENT REPORT
COST MANAGEMENT REPORT
 
07 projectcostmanagement
07 projectcostmanagement07 projectcostmanagement
07 projectcostmanagement
 
CostManagementSlides.pdf
CostManagementSlides.pdfCostManagementSlides.pdf
CostManagementSlides.pdf
 
Bridging the cost schedule divide - integrating primavera and cost systems ppt
Bridging the cost schedule divide - integrating primavera and cost systems pptBridging the cost schedule divide - integrating primavera and cost systems ppt
Bridging the cost schedule divide - integrating primavera and cost systems ppt
 
PMP Module 4 - Cost
PMP Module 4 - CostPMP Module 4 - Cost
PMP Module 4 - Cost
 
4- Project Cost Management.ppt
4- Project Cost Management.ppt4- Project Cost Management.ppt
4- Project Cost Management.ppt
 
Project Management: Cost Management Knowledge Area
Project Management: Cost Management Knowledge AreaProject Management: Cost Management Knowledge Area
Project Management: Cost Management Knowledge Area
 
Quality metrics in project management
Quality metrics in project managementQuality metrics in project management
Quality metrics in project management
 
8.project cost management
8.project cost management8.project cost management
8.project cost management
 
Project Management.pptx
Project Management.pptxProject Management.pptx
Project Management.pptx
 
Lecture 06 project_cost_management
Lecture 06 project_cost_managementLecture 06 project_cost_management
Lecture 06 project_cost_management
 
07.cost management updated
07.cost management updated07.cost management updated
07.cost management updated
 
PMP Training - 07 project cost management
PMP Training - 07 project cost managementPMP Training - 07 project cost management
PMP Training - 07 project cost management
 

More from B M Shahrier Majumder, PMP, CSM

PMP Exam Preparation Course: 07 Project Quality Management
PMP Exam Preparation Course: 07 Project Quality ManagementPMP Exam Preparation Course: 07 Project Quality Management
PMP Exam Preparation Course: 07 Project Quality Management
B M Shahrier Majumder, PMP, CSM
 
PMP Exam Preparation Course: 05 Project Time Management
PMP Exam Preparation Course: 05 Project Time ManagementPMP Exam Preparation Course: 05 Project Time Management
PMP Exam Preparation Course: 05 Project Time Management
B M Shahrier Majumder, PMP, CSM
 
PMP Exam Preparation Course: 04 Project Scope Management
PMP Exam Preparation Course: 04 Project Scope ManagementPMP Exam Preparation Course: 04 Project Scope Management
PMP Exam Preparation Course: 04 Project Scope Management
B M Shahrier Majumder, PMP, CSM
 
PMP Exam Preparation Course: 02 Project Management Processes
PMP Exam Preparation Course: 02 Project Management ProcessesPMP Exam Preparation Course: 02 Project Management Processes
PMP Exam Preparation Course: 02 Project Management Processes
B M Shahrier Majumder, PMP, CSM
 
PMP Exam Preparation Course: 01 Project Management Framework
PMP Exam Preparation Course: 01 Project Management FrameworkPMP Exam Preparation Course: 01 Project Management Framework
PMP Exam Preparation Course: 01 Project Management Framework
B M Shahrier Majumder, PMP, CSM
 
CMMI Appraisal Summary
CMMI Appraisal SummaryCMMI Appraisal Summary
CMMI Appraisal Summary
B M Shahrier Majumder, PMP, CSM
 
Southtech continues ISO 9001
Southtech continues ISO 9001Southtech continues ISO 9001
Southtech continues ISO 9001
B M Shahrier Majumder, PMP, CSM
 
Southtech Achieved CMMI L3
Southtech Achieved CMMI L3Southtech Achieved CMMI L3
Southtech Achieved CMMI L3
B M Shahrier Majumder, PMP, CSM
 
Software Quality Assurance
Software Quality AssuranceSoftware Quality Assurance
Software Quality Assurance
B M Shahrier Majumder, PMP, CSM
 
Information System Dashboard
Information System DashboardInformation System Dashboard
Information System Dashboard
B M Shahrier Majumder, PMP, CSM
 

More from B M Shahrier Majumder, PMP, CSM (10)

PMP Exam Preparation Course: 07 Project Quality Management
PMP Exam Preparation Course: 07 Project Quality ManagementPMP Exam Preparation Course: 07 Project Quality Management
PMP Exam Preparation Course: 07 Project Quality Management
 
PMP Exam Preparation Course: 05 Project Time Management
PMP Exam Preparation Course: 05 Project Time ManagementPMP Exam Preparation Course: 05 Project Time Management
PMP Exam Preparation Course: 05 Project Time Management
 
PMP Exam Preparation Course: 04 Project Scope Management
PMP Exam Preparation Course: 04 Project Scope ManagementPMP Exam Preparation Course: 04 Project Scope Management
PMP Exam Preparation Course: 04 Project Scope Management
 
PMP Exam Preparation Course: 02 Project Management Processes
PMP Exam Preparation Course: 02 Project Management ProcessesPMP Exam Preparation Course: 02 Project Management Processes
PMP Exam Preparation Course: 02 Project Management Processes
 
PMP Exam Preparation Course: 01 Project Management Framework
PMP Exam Preparation Course: 01 Project Management FrameworkPMP Exam Preparation Course: 01 Project Management Framework
PMP Exam Preparation Course: 01 Project Management Framework
 
CMMI Appraisal Summary
CMMI Appraisal SummaryCMMI Appraisal Summary
CMMI Appraisal Summary
 
Southtech continues ISO 9001
Southtech continues ISO 9001Southtech continues ISO 9001
Southtech continues ISO 9001
 
Southtech Achieved CMMI L3
Southtech Achieved CMMI L3Southtech Achieved CMMI L3
Southtech Achieved CMMI L3
 
Software Quality Assurance
Software Quality AssuranceSoftware Quality Assurance
Software Quality Assurance
 
Information System Dashboard
Information System DashboardInformation System Dashboard
Information System Dashboard
 

Recently uploaded

Lecture Notes Unit4 Chapter13 users , roles and privileges
Lecture Notes Unit4 Chapter13 users , roles and privilegesLecture Notes Unit4 Chapter13 users , roles and privileges
Lecture Notes Unit4 Chapter13 users , roles and privileges
Murugan146644
 
Introduction to Google Productivity Tools for Office and Personal Use
Introduction to Google Productivity Tools for Office and Personal UseIntroduction to Google Productivity Tools for Office and Personal Use
Introduction to Google Productivity Tools for Office and Personal Use
Excellence Foundation for South Sudan
 
Open and Critical Perspectives on AI in Education
Open and Critical Perspectives on AI in EducationOpen and Critical Perspectives on AI in Education
Open and Critical Perspectives on AI in Education
Robert Farrow
 
Node JS Interview Question PDF By ScholarHat
Node JS Interview Question PDF By ScholarHatNode JS Interview Question PDF By ScholarHat
Node JS Interview Question PDF By ScholarHat
Scholarhat
 
Open Source and AI - ByWater Closing Keynote Presentation.pdf
Open Source and AI - ByWater Closing Keynote Presentation.pdfOpen Source and AI - ByWater Closing Keynote Presentation.pdf
Open Source and AI - ByWater Closing Keynote Presentation.pdf
Jessica Zairo
 
BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...
BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...
BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...
Nguyen Thanh Tu Collection
 
5. Postharvest deterioration of fruits and vegetables.pptx
5. Postharvest deterioration of fruits and vegetables.pptx5. Postharvest deterioration of fruits and vegetables.pptx
5. Postharvest deterioration of fruits and vegetables.pptx
UmeshTimilsina1
 
Demonstration module in Odoo 17 - Odoo 17 Slides
Demonstration module in Odoo 17 - Odoo 17 SlidesDemonstration module in Odoo 17 - Odoo 17 Slides
Demonstration module in Odoo 17 - Odoo 17 Slides
Celine George
 
How To Sell Hamster Kombat Coin In Pre-market
How To Sell Hamster Kombat Coin In Pre-marketHow To Sell Hamster Kombat Coin In Pre-market
How To Sell Hamster Kombat Coin In Pre-market
Sikandar Ali
 
Java MCQ Questions and Answers PDF By ScholarHat
Java MCQ Questions and Answers PDF By ScholarHatJava MCQ Questions and Answers PDF By ScholarHat
Java MCQ Questions and Answers PDF By ScholarHat
Scholarhat
 
FINAL MATATAG Science CG 2023 Grades 3-10.pdf
FINAL MATATAG Science CG 2023 Grades 3-10.pdfFINAL MATATAG Science CG 2023 Grades 3-10.pdf
FINAL MATATAG Science CG 2023 Grades 3-10.pdf
maritescanete2
 
Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025
Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025
Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025
ALBERTHISOLER1
 
Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...
Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...
Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...
Codeavour International
 
2024 Winter SWAYAM NPTEL & A Student.pptx
2024 Winter SWAYAM NPTEL & A Student.pptx2024 Winter SWAYAM NPTEL & A Student.pptx
2024 Winter SWAYAM NPTEL & A Student.pptx
Utsav Yagnik
 
QCE – Unpacking the syllabus Implications for Senior School practices and ass...
QCE – Unpacking the syllabus Implications for Senior School practices and ass...QCE – Unpacking the syllabus Implications for Senior School practices and ass...
QCE – Unpacking the syllabus Implications for Senior School practices and ass...
mansk2
 
C Interview Questions PDF By Scholarhat.pdf
C Interview Questions PDF By Scholarhat.pdfC Interview Questions PDF By Scholarhat.pdf
C Interview Questions PDF By Scholarhat.pdf
Scholarhat
 
SD_Integrating 21st Century Skills in Classroom-based Assessment.pptx
SD_Integrating 21st Century Skills in Classroom-based Assessment.pptxSD_Integrating 21st Century Skills in Classroom-based Assessment.pptx
SD_Integrating 21st Century Skills in Classroom-based Assessment.pptx
elwoodprias1
 
6. Physiological Disorder of fruits and vegetables.pptx
6. Physiological Disorder of fruits and vegetables.pptx6. Physiological Disorder of fruits and vegetables.pptx
6. Physiological Disorder of fruits and vegetables.pptx
UmeshTimilsina1
 
INSIDE OUT - PowerPoint Presentation.pptx
INSIDE OUT - PowerPoint Presentation.pptxINSIDE OUT - PowerPoint Presentation.pptx
INSIDE OUT - PowerPoint Presentation.pptx
RODELAZARES3
 
MVC Interview Questions PDF By ScholarHat
MVC Interview Questions PDF By ScholarHatMVC Interview Questions PDF By ScholarHat
MVC Interview Questions PDF By ScholarHat
Scholarhat
 

Recently uploaded (20)

Lecture Notes Unit4 Chapter13 users , roles and privileges
Lecture Notes Unit4 Chapter13 users , roles and privilegesLecture Notes Unit4 Chapter13 users , roles and privileges
Lecture Notes Unit4 Chapter13 users , roles and privileges
 
Introduction to Google Productivity Tools for Office and Personal Use
Introduction to Google Productivity Tools for Office and Personal UseIntroduction to Google Productivity Tools for Office and Personal Use
Introduction to Google Productivity Tools for Office and Personal Use
 
Open and Critical Perspectives on AI in Education
Open and Critical Perspectives on AI in EducationOpen and Critical Perspectives on AI in Education
Open and Critical Perspectives on AI in Education
 
Node JS Interview Question PDF By ScholarHat
Node JS Interview Question PDF By ScholarHatNode JS Interview Question PDF By ScholarHat
Node JS Interview Question PDF By ScholarHat
 
Open Source and AI - ByWater Closing Keynote Presentation.pdf
Open Source and AI - ByWater Closing Keynote Presentation.pdfOpen Source and AI - ByWater Closing Keynote Presentation.pdf
Open Source and AI - ByWater Closing Keynote Presentation.pdf
 
BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...
BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...
BÀI TẬP BỔ TRỢ 4 KỸ NĂNG TIẾNG ANH LỚP 12 - GLOBAL SUCCESS - FORM MỚI 2025 - ...
 
5. Postharvest deterioration of fruits and vegetables.pptx
5. Postharvest deterioration of fruits and vegetables.pptx5. Postharvest deterioration of fruits and vegetables.pptx
5. Postharvest deterioration of fruits and vegetables.pptx
 
Demonstration module in Odoo 17 - Odoo 17 Slides
Demonstration module in Odoo 17 - Odoo 17 SlidesDemonstration module in Odoo 17 - Odoo 17 Slides
Demonstration module in Odoo 17 - Odoo 17 Slides
 
How To Sell Hamster Kombat Coin In Pre-market
How To Sell Hamster Kombat Coin In Pre-marketHow To Sell Hamster Kombat Coin In Pre-market
How To Sell Hamster Kombat Coin In Pre-market
 
Java MCQ Questions and Answers PDF By ScholarHat
Java MCQ Questions and Answers PDF By ScholarHatJava MCQ Questions and Answers PDF By ScholarHat
Java MCQ Questions and Answers PDF By ScholarHat
 
FINAL MATATAG Science CG 2023 Grades 3-10.pdf
FINAL MATATAG Science CG 2023 Grades 3-10.pdfFINAL MATATAG Science CG 2023 Grades 3-10.pdf
FINAL MATATAG Science CG 2023 Grades 3-10.pdf
 
Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025
Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025
Brigada Eskwela 2024 PowerPoint Update for SY 2024-2025
 
Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...
Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...
Codeavour 5.0 International Impact Report - The Biggest International AI, Cod...
 
2024 Winter SWAYAM NPTEL & A Student.pptx
2024 Winter SWAYAM NPTEL & A Student.pptx2024 Winter SWAYAM NPTEL & A Student.pptx
2024 Winter SWAYAM NPTEL & A Student.pptx
 
QCE – Unpacking the syllabus Implications for Senior School practices and ass...
QCE – Unpacking the syllabus Implications for Senior School practices and ass...QCE – Unpacking the syllabus Implications for Senior School practices and ass...
QCE – Unpacking the syllabus Implications for Senior School practices and ass...
 
C Interview Questions PDF By Scholarhat.pdf
C Interview Questions PDF By Scholarhat.pdfC Interview Questions PDF By Scholarhat.pdf
C Interview Questions PDF By Scholarhat.pdf
 
SD_Integrating 21st Century Skills in Classroom-based Assessment.pptx
SD_Integrating 21st Century Skills in Classroom-based Assessment.pptxSD_Integrating 21st Century Skills in Classroom-based Assessment.pptx
SD_Integrating 21st Century Skills in Classroom-based Assessment.pptx
 
6. Physiological Disorder of fruits and vegetables.pptx
6. Physiological Disorder of fruits and vegetables.pptx6. Physiological Disorder of fruits and vegetables.pptx
6. Physiological Disorder of fruits and vegetables.pptx
 
INSIDE OUT - PowerPoint Presentation.pptx
INSIDE OUT - PowerPoint Presentation.pptxINSIDE OUT - PowerPoint Presentation.pptx
INSIDE OUT - PowerPoint Presentation.pptx
 
MVC Interview Questions PDF By ScholarHat
MVC Interview Questions PDF By ScholarHatMVC Interview Questions PDF By ScholarHat
MVC Interview Questions PDF By ScholarHat
 

PMP Exam Preparation Course: 06 Project Cost Management

  • 1. www.wizardea.com | contact@wizardea.com B. M. Shahrier Majumder, PMP PMP® Exam Preparation
  • 3. www.wizardea.com | contact@wizardea.com Learning Objectives Upon completion of this topic you will learn about – The processes, activities and documentation items for Project Cost Management – Elements (and deliverables) for Project Cost Management – Tools and techniques of the key activities of the Project Cost Management 3
  • 4. www.wizardea.com | contact@wizardea.com Cost Management Project Cost Management includes the processes involved in planning, estimating, budgeting and controlling costs so that the project can be completed within the approved budget. 4
  • 5. www.wizardea.com | contact@wizardea.com Key Activities of Cost Management • Estimate Cost: The process of developing an approximation of the monetary resources needed to complete project activities. • Determine Budget: The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. • Control Cost: The process of monitoring the status of the project to update the project budget and managing changes to the cost baseline. 5
  • 7. www.wizardea.com | contact@wizardea.com Estimate Cost Inputs Tools & Techniques Outputs Scope baseline Project schedule Human resource Plan Risk register Enterprise environmental factors Organizational process assets Expert judgment Analogous estimating Parametric estimating Bottom-up estimating Three point estimating Reserve analysis Cost of quality Project management estimating software Vendor bid analysis Activity cost estimates Basis of estimates Project document updates
  • 8. www.wizardea.com | contact@wizardea.com Estimate > Inputs  Enterprise Environmental Factors  Market place condition  Commercial database  Organizational Process Assets  Cost estimating policies  Cost estimating templates  Historical information  Project knowledge database  Lesson learn database 8
  • 9. www.wizardea.com | contact@wizardea.com Estimate Cost > Tools and Techniques • Bottom-up estimating • Estimates made at the work-package of the WBS and rolled up • Very accurate • Needs sufficient information to make an accurate estimate • Vendor Bid Analysis • Analysis of what the project should cost, based on the responsive bids from qualified vendors. Where project are awarded to a vendor under competitive processes , additional cost estimating work can be required of the project team to examine the price of individual deliverables and to deliver the cost that supports the final total project cost. 9
  • 11. www.wizardea.com | contact@wizardea.com Determine Budget Inputs Tools & Techniques Outputs Activity cost estimates Basis of estimates Scope baseline Project schedule Resources calendars Contract Organization process assets Cost aggregation Reserve analysis Expert judgment Historical relationships Funding limit reconciliation Cost performance baseline Project funding requirements Project document updates
  • 12. www.wizardea.com | contact@wizardea.com Determine Budget > Tools and Techniques • Cost Aggregation 12
  • 13. www.wizardea.com | contact@wizardea.com Determine Budget > Tools and Techniques • Funding Limit Reconciliation • The expenditure of funds should be reconciled with any funding limit of the commitment of funds for the project. • A variance between funding limits and the planed expenditures will sometimes necessitate the rescheduling of work to level out the rate of expenditures. 13
  • 14. www.wizardea.com | contact@wizardea.com Determine Budget > Outputs • Cost Performance Baseline – A time-phased budget that is used to measure and monitor cost performance on a project – The approved cost estimates – Displayed graphically as cumulative costs over time – Displayed as an S-Curve 14 • Funding Requirements – Total and periodic funding requirements, are derived from the cost baseline and can established to exceed, usually by a margin to allow for either early progress or cost overrun.
  • 16. www.wizardea.com | contact@wizardea.com Control Costs Inputs Tools & Techniques Outputs Project management plan Project funding requirements Work performance information Organizational process assets Eared value management Forecasting To complete performance index Performance reviews Variance analysis Project management software Work performance measurements Budget forecasts Organizational process assets updates Change requests Project management plan updates Project document updates
  • 17. www.wizardea.com | contact@wizardea.com Control Cost > Tools and Techniques • Earned Value Management (EVM) • EVM in its various forms is a commonly used method of performance measurement. It integrates project scope, cost and schedule measures to help project management team assess an measure project performance and progress. • EVM develops and monitors three key dimensions of each work package and control account. These are Planned Value (PV), Earned Value (EV) and Actual Cost (AC). 17
  • 18. www.wizardea.com | contact@wizardea.com Control Cost > Tools and Techniques • Terms to be remember: 18 Abbr. Name Formula BAC Budget at Completion How much did we budget for the TOTAL project effort? PV Planned Value What is the estimated value of the work planned to be done as of now? EV Earn Value What is the estimated value of the work actually accomplished as of now? AC Actual Cost What is the actual cost incurred for the work accomplished? CV Cost Variance Currently project is over budgeted or under budgeted? SV Schedule Variance Currently project is ahead of schedule or behind of schedule? CPI Cost Performance Index How much worth of work we are getting out of every $1 spent. SPI Schedule Performance Index What is our progress at percent of the rate originally planned? EAC Estimate at Completion What do we currently expect the TOTAL project to cost? VAC Variance at Completion How much over or under budget do we expect to be at the end of the project? ETC Estimate to Complete From this point of now, how much more do we expect it to cost to finish the project?
  • 19. www.wizardea.com | contact@wizardea.com Control Cost > Tools and Techniques • Earned Value Analysis 19 Abbr. Name Formula Good Bad EV Earn Value BAC x Percent Complete NA NA PV Planned Value BAC x Percent Duration NA NA CV Cost Variance EV-AC +ve -ve SV Schedule Variance EV-PV +ve -ve CPI Cost Performance Index EV/AC >1 <1 SPI Schedule Performance Index EV/PV >1 <1 CV% Cost Variance Percentage CV/EV +ve -ve SV% Schedule Variance Percentage SV/PV +ve -ve EAC Estimate at Completion BAC/CPI <BAC >BAC VAC Variance at Completion BAC-EAC +ve -ve ETC Estimate to Complete EAC-AC NA NA
  • 20. www.wizardea.com | contact@wizardea.com Control Cost > Tools and Techniques • Exercise – Total Budget = $2975 – % Duration complete: 60% – % Complete = 59% – Actual Cost = 1575 – Find out the all values as per EVM formula table. 20
  • 21. www.wizardea.com | contact@wizardea.com Project Selection Method • Present Value • Net Present Value • IRR (Internal Rate of Return): The rate at which the project inflows (revenue) and outflows (cost) are equal. • Payback Period • Benefit Cost Ratio 21
  • 22. www.wizardea.com | contact@wizardea.com Cost Management > Some Important Definition • Present Value: The value of future cash flows – Formula (PV = (FV/(1+r)n [ Here, PV = Present Value, FV = Future Value, r = Interest Rate, n = Number of time periods] • Net Present Value: The difference between the present value of cash inflows and the present value of cash outflows. • IRR (Internal Rate of Return): The rate at which the project inflows (revenue) and outflows (cost) are equal. 22
  • 23. www.wizardea.com | contact@wizardea.com Cost Management > Some Important Definition • Payback Period: The number of time periods it takes to recover your investment in the project before you start accumulating profit. • Benefit Cost Ratio: Benefit cost ratio > 1 means the benefits are grater than the costs. • Sunk Cost: Money already spent and permanently lost. 23
  • 24. www.wizardea.com | contact@wizardea.com Questions 24 • [mail.shahrier@gmail.com] • http://bd.linkedin.com/in/shahrier