pmbok 4th edition chapter 7 - project cost management

Download Pmbok 4th edition   chapter 7 - Project Cost Management

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I am Continuously seeking to improve my competencies and skills to provide first class professional Project Management training courses; and develop my scope experience in Project Management functions.I am confident that my innovative and results-focused approach would make significant contribution to the continued success of your organization.this is the first presentations uploaded to Slide Share, For more information do not hesitate to contact me.Ahmad H. Maharma - PMP®Ramallah, Palestine Phone: + (972) (2) 2968644Mobile: + (972) (599) 001155 E-Mail: ahmad.maharma@gmail.com

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  • 1. CHAPTER7PROJECTCOSTMANAGEMENT Ahmad H. Maharma PMP
  • 2. PMKnowledgeAreas&ProcessGroupsPM Process Initiating Process Planning Process Group Executing Process Monitoring & Controlling ClosingGroups / Group Group Process Group ProcessKnowledge GroupArea ProcessesProject Develop Project Charter Develop Project Management Direct and Manage Project Monitor and Control Project Work Close ProjectManagement Plan Execution Integrated Change ControlIntegrationProject Scope Collect requirements Verify ScopeManagement Define Scope Control Scope Create WBSProject Time Define Activity Schedule ControlManagement Sequence Activity Estimating Resource Estimating Duration Develop ScheduleProject Cost Estimating Cost Control CostManagement Budgeting CostProject Quality Quality Planning Perform Quality Assurance Perform Quality ControlManagementProject HR Human Resources Planning Acquire Project TeamManagement Develop Project Team Manage Project TeamProject Identify Stakeholders Plan Communications Distribute Information Performance ReportingCommunications Manage stakeholdersManagement expectationsProject Risk Plan Risk Management Risk Monitoring and ControlManagement Risk Identification Qualitative / Quantitative Risk Analysis y Risk Response PlanningProject Plan procurement Conduct procurement Administer Contract CloseProcurement procurementManagement
  • 3. ProjectCostManagement Monitoring & Controlling Processes Planning Processes Enter phase/ Initiating Closing Exit phase/ Start project Processes Processes End project Executing Processes ProcessKnowledge Area Monitoring & g Initiating I iti ti Planning Pl i Executing E ti Closing Cl i Control Cost Estimating Cost Cost B d ti C t Budgeting Cost Control
  • 4. ProjectCostManagement
  • 5. ProjectCostManagementProjectCostManagementincludestheprocessesinvolvedinestimating,budgeting,andcontrollingcostssothattheprojectcanbecompletedwithintheapprovedbudget.Figure71providesanoverviewoftheProjectwithin the approved budget Figure 7 1 provides an overview of the ProjectCostManagementprocesseswhichincludethefollowing:7.1EstimateCosts Theprocessofdevelopinganapproximationofthemonetary7.1 Estimate CostsThe process of developing an approximation of the monetaryresourcesneededtocompleteprojectactivities.7.2DetermineBudgetTheprocessofaggregatingtheestimatedcostsof g p gg g gindividualactivitiesorworkpackagestoestablishanauthorizedcostbaseline.7.3ControlCostsThe processofmonitoringthestatusoftheprojecttoupdatetheprojectbudgetandmanagingchangestothecostbaseline.
  • 6. ProjectCostManagementThecostmanagementplancanestablishthefollowing: Levelofaccuracy.Activitycostestimateswilladheretoaroundingof thedatatoaprescribedprecision(e.g.,$100,$1,000), the data to a prescribed precision (e g $100 $1 000) basedonthescopeoftheactivitiesandmagnitudeoftheproject, andmayincludeanamountforcontingencies.Unitsofmeasure.Eachunitusedinmeasurements(suchasstaffhours,staffdays,weeks,orlumpsum)isdefinedforeachoftheresources. Organizationalprocedureslinks.Theworkbreakdownstructure(WBS) providestheframeworkforthecostmanagementplan, allowingforconsistencywiththeestimates,budgets, andcontrolofcosts.TheWBScomponentusedfortheprojectcost d t l f t Th WBS t d f th j t t accountingiscalledthecontrolaccount(CA).Eachcontrolaccountisassignedauniquecodeoraccountnumber(s)Each control account is assigned a unique code or account number(s)thatlinksdirectlytotheperformingorganizationsaccountingsystem.
  • 7. ProjectCostManagement Controlthresholds:Variancethresholdsformonitoringcostperformancemaybespecifiedtoindicateanagreeduponamountofvariationtobeallowedbeforesomeactionneedstobetaken. ti d t b t kThresholdsaretypicallyexpressedaspercentagedeviationsfromthebaselineplan. Rulesofperformancemeasurement.Earnedvaluemanagement(EVM)rulesofperformancemeasurementareset.Forexample,thecostmanagementplancould: Define the WBS and points at which measurement of control accounts will be performed DefinetheWBSandpointsatwhichmeasurementofcontrolaccountswillbeperformed, Establishtheearnedvaluemeasurementtechniques(e.g.,weightedmilestones,fixed formula,percentcomplete,etc.)tobeemployed,and Specifytheearnedvaluemanagementcomputationequationsfordeterminingthe projectedestimateatcompletion(EAC)forecastsandothertrackingmethodologies.
  • 8. ProjectCostManagement Reportingformats:Theformatsandfrequencyforthevariouscost reportsaredefined. Processdescriptions.Descriptionsofeachofthethreecostmanagement processesaredocumented.Allofthisinformationisincludedinthecostmanagementplan,acomponentoftheprojectmanagementplan,eitherastextwithinthebody t f th j t t l ith t t ithi th b doftheplanorasappendices.ThecostmanagementplanmaybeformalorThe cost management plan may be formal orinformal,highlydetailedorbroadlyframed,basedupontheneedsoftheproject.
  • 9. 7.1CostEstimating
  • 10. 7.1CostEstimating
  • 11. 7.1CostEstimating 7.1 Cost Estimating EstimateCostsistheprocessofdevelopinganapproximation y p ofthemonetaryresourcesneededtocomplete Costestimatesaregenerallyexpressedinunitsofsome currency(i.e.,dollars,euro,yen,etc.),althoughinsome instancesotherunitsofmeasure,suchasstaffhoursorstaff days, a e used to ac tate co pa so s by e days,areusedtofacilitatecomparisonsbyeliminatingthe at g t e effectsofcurrencyfluctuations. Costestimatesshouldberefinedduringthecourseofthe projecttoreflectadditionaldetailasitbecomesavailable. 11
  • 12. 7.1CostEstimating 7.1 Cost Estimating Theaccuracyofaprojectestimatewillincreaseastheproject p g progressesthroughtheprojectlifecycle. g p j y Hencecostestimatingisani