Project Cost Management

Presentation Outline

• Project Cost Overview

• Resource Planning
• Cost Estimating
• Cost Budgeting
• Cost Control

1
 Project Cost Management Overview

1. Resource
Planning

2. Cost 3. Cost
Estimating Budgeting

4. Cost
Control

Resource Planning

Resource Planning
• involves determining what
physical resources (people,
equipment, materials) and what
quantities of each should be
used to deliver project activities

2
 Resource Planning
Inputs Tools & Technique
• Work Breakdown Structure • Expert Judgement
(WBS) • Alternatives Identification
• Historical Information
• Scope Statement
• Resource Pool Description

Output
• Resource Requirement:
– Description of the types & quantity of
resources required for each element of WBS

Cost Estimating

• Cost Estimating is primarily

concerned about developing
an approximation (estimate)
of the costs of the resources
needed to complete project
activities

How much will it cost to deliver this project on schedule

3
 Cost Estimating
Inputs Tools & Technique
• Work Breakdown Structure • Analogous Estimating
(WBS)
• Parametric Modeling
• Resource Requirements
• Bottom-up Estimating
• Resource Rates
• Activity Duration Estimates • Computerised tools
• Historical Information
• Chart of Accounts

Output
• Cost Estimates
• Supporting Detail
• Cost Management Plan

Cost Budgeting

• Cost budgeting involves

allocating the overall cost $ N
estimates to individual
work items in order to
establish a cost baseline
for measuring project
performance

4
 Cost Budgeting
Inputs Tools & Technique
• Cost Estimates • Cost Estimating Tools &
Techniques
• Work Breakdown
Structure (WBS)

• Project Schedule

Output
• Cost Baseline:
– a time -phased budget to measure &
monitor cost performance

Cost Control

Cost Control is concerned with

• influencing the factors that drive
changes to the baseline to ensure
that changes are beneficial

• determining that the cost baseline

has changed, and

• managing the actual changes

when and as they occur.

5
 Cost Control Includes:

• Monitoring Cost performance to detect variances from plan

• Ensuring that all appropriate changes are recorded
accurately in the cost baseline
• Preventing incorrect, inappropriate, or unauthorised
changes from being included in the cost baseline

• Informing appropriate stakeholders of authorised changes

Cost Control
Inputs Tools & Technique
• Cost baseline • Cost Change Control
System
• Performance Reports
• Performance Measurement
• Change Requests
• Additional Planning
• Cost Management Plan • Computerised Tools

Output
• Revised Cost Estimates
• Budget updates
• Corrective Action
• Estimate at completion
• Lessons learned

6
Thank You