Knowledge areas
Question:
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Evaluate and apply a range of project scope, cost and time Management Planning techniques and Practices to address the needs of complex project briefs, including global, paying particular attention to issues Impacting Project outcomes.
Throughout the project life cycle, the cost can be incurred that was not initially considered as part of direct work activity cost by the project’s manager, but that has an impact on project budget (Wilson, 2017).In most scenarios, the cost associated with directly with work events are portion of the estimates of the budget baseline. Nevertheless supplementary cost do arise from time to time in project life cycle, it’s the project manager responsibility to address this sorts of cost and its effect on time and quality (Wilson, 2017).In developing project plan budget estimation, the manager should not address the direct cost but also the added costs.
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Knowledge areas.
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Processes that are major
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Primary inputs
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Techniques and tools
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Primary outputs
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Cost planning
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Resources required for work breakdown structure.
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Cost Appraisal
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Develop the cost estimation of the resources required for project completion.
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1. Organizational progression assets.
2. Environmental factors affecting enterprise.
3. Structure for work breakdown.
4. Management plan for the project.
5. Risk register.
6. Management plan for the schedule.
7. Management plan for staffing.
8. WBS dictionary.
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1. Cost rates resource determination.
2. Bottom up estimation.
3. Analogous estimation.
4. Parametric estimation.
5. Project management software.
6. Merchant bid analysis.
7. Quality cost.
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1. Cost approximations of the activity.
2. Supporting details on the cost estimation of the activity.
3. Cost on changes requested.
4. Cost management plan updates.
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Budgeting of the costs.
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Establish cost baseline through aggregation of the estimated cost of individual activities or packages.
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1. Work breakdown structure.
2. WBS dictionary.
3. Statement of project scope.
4. Estimates of cost activity.
5. Supporting details of activity cost estimations.
6. Project schedule.
7. Calendars of resources.
8. Contracts.
9. Management plan cost.
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1. Aggregation cost.
2. Analysis of reserves.
3. Estimation of parametric.
4. Reconciliation of funding limits.
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1. Requirements for project funding.
2. Management plan cost updates.
3. Price baseline.
4. Requested changes.
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Cost control
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Influencing factors that control changes to the budget of the project through creating cost variance.
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1. Reports performance.
2. Requirements for project funding.
3. Cost baseline.
4. Information on work performance.
5. Project management plan.
6. Request changes that have been approved.
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1. Performance measurement analysis.
2. Forecasting.
3. Variance measurement.
4. Cost change control system.
5. Project management software.
6. Variance dimension.
7. Project performance reviews.
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1. Price baseline apprises
2. Estimation on price apprises
3. Performance measurement.
4. Predicted finishing point.
5. Changes bidden.
6. Suggested counteractive actions.
7. Business process possessions update.
8. Project management plan updates.
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Resource planning
Reserve forecasting, in the preliminary stage of a project, the obligatory assets to finish project undertakings needs to be demarcated.to define which resources are required, work break down and chronological data of previous similar projects can be used. Once the resources required are known, it becomes easier to estimate the cost.
Cost estimating.
Various price estimation approaches are used to estimate how much it will cost for project activities to be performed. Depending on the information available, the choice of estimation is made possible. Estimates can be polished when more data are present during the project life cycle. Uncertainties that have not been estimated will likely cause an additional cost which can be sheltered by setting aside cost using contingencies.
Cost budgeting
Determination of cost budget is the third process in cost management knowledge area. Upon completing estimation, all costs estimation are put together to determine the cost budget of the project (Bouvrie, 2017). The budget predicts the amount to be used during project life cycle.. Cost baseline is an approved time phase that is used as a starting point to measure actual performance progress (“4 Main Processes of Cost Management – Master of Project Academy Blog”, 2017). After completion of activity cost estimates, there is the reserve of contingency on top of the estimates to accommodate any risk that might occur during the project.
Cost control
Cost control is concerned with measuring variances from the cost baseline and taking effective corrective action achieves minimum costs (Bouvrie, 2017). Processes placed to monitor performance and expenditure alongside the projects progress. Final total cost should be continually forecasted while all changes to the cost baseline are recorded.
Processes that are major
Techniques
Analogous estimation. This technique uses past projects that are similar to current project to estimate the cost and duration (Fremouv, Fremouv & Crow, 2017). It’s mostly used when there is limited information regarding the current projects, is mostly considered top-down and not accurate as other techniques for estimation.
Parametric estimating. This technique uses the correlation between variables to calculate duration and cost. It are considered the most accurate technique for duration and cost estimation. Estimates for parametric are determined through identifying the duration and unit cost and units required for the activity (Fremouv, Fremouv & Crow, 2017).
Bottom-up. In this technique of estimation, the estimate of the whole component is arrived at through rolling up the cost of individual activities or workloads.
Reserve analysis. Reserve analysis is estimated to be used by managers in case of certain events that were anticipated (“Cost Management | PMPNotes.com”, 2017).
Cost of quality. Organizations cost of quality comprises of cost like training, audits cost, e.t.c
Project management software. Software’s used in project management can help in speeding up the calculations required to do cost estimation. These calculations include overhead, indirect, fixed cost for a variety of activities.
Determining resources cost rates. Resources can be the vendors, consultants, suppliers, human resources, technicians, e.t.c. The rate involved in the resource cost estimation and project managers do have an idea of it.
Performance measurement analysis. Performance measurement techniques are used to analyze the level of performance while making a comparison with the competitors hence planning for future activities. The technique is used in quality control for determination of whether the procedure taken for quality assurance has worked.
References
Bouvrie, C. (2017). Cost Management explained in 4 steps. Costmanagement.eu. Retrieved 25 November 2017, from https://www.costmanagement.eu/blog-article/198-cost-management-explained-in-4-steps.
Cost Management | PMPNotes.com. (2017). Pmpnotes.com. Retrieved 24 November 2017, from https://www.pmpnotes.com/pmp-notes/cost-management/
Fremouv, B., Fremouv, D., & Crow, M. (2017). Analogous Estimating vs Parametric Estimating – PMP Exam Concepts. Passionate Project Management. Retrieved 24 November 2017, from https://www.passionatepm.com/blog/analogous-estimating-vs-parametric-estimating-pmp-concept-4
Wilson, R. (2017). Managing Time, Cost, and Quality | Introduction to Mastering Project Time Management, Cost Control, and Quality Management: Proven Methods for Controlling the Three Elements that Define Project Deliverables | InformIT. Informit.com. Retrieved 24 November 2017, from https://www.informit.com/articles/article.aspx?p=2344987&seqNum=3
Aaltonen, K., & Kujala, J. (2010). A project lifecycle perspective on stakeholder influence strategies in global projects. Scandinavian Journal of Management, 26(4), 381–397.
Cost Management – IO4PM International Organization for Project Management. (2017). Io4pm.org. Retrieved 24 November 2017, from https://www.io4pm.org/Cost_Management.php
Survey Research Center. (2016). Guidelines for Best Practice in Cross-Cultural Surveys. Ann Arbor, MI: Survey Research Center, Institute for Social Research, University of Michigan. Retrieved Month, dd, yyyy, from https://www.ccsg.isr.umich.edu/ .
Rodrigues, I., & Sbragia, R. (2013). The cultural challenges of managing global project teams: A study of Brazilian multinationals. Journal of Technology Management and Innovation, 8. Retrieved from https://www.jotmi.org/index.php/GT/article/view/1237
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