Project cost Management by ambarish1987

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									Project Cost Management

• Project cost Management includes the processes required to ensure that the project is completed within the approved budget • Resource Planning • Cost Estimating • Cost Budgeting • Cost Control • PCM is primarily concerned with the cost of the resources required to complete project activities

• Resource planning : Determining what
resources ( People ,equipment , material s ) and what quantities of each should be used to perform project activities • Inputs :WBS, Historical information , Scope statement , Resource pool description , Organizational policies • Tools and Techniques : Expert Judgment, Alternatives identification • Outputs : Resource requirements

• Cost estimating :Involves developing an
approximation ( estimate of the cost of the resources needed to complete project activities • Inputs : WBS, Resource requirements , Resource rates Activity duration estimate , Historical information ( Project files, Commercial cost estimating data bases , Project team knowledge , ) , Chart of accounts .

• Tools and techniques : Analogous
estimating , Parametric modeling ,Bottom up estimating , Computerized tools

• Out puts : Cost estimates , Supporting details ( assumptions , Range , ) , Cost management plan ( Management of cost variances )

• Cost budgeting : Involves allocating the overall
cost estimates to individual work items in order to establish a cost base line for measuring cost performance . • Inputs : WBS, Cost estimates , Project schedule • Tools and techniques : Cost estimating tools and techniques • Outputs : Cost base line ( A time phased budget that will be used to measure and monitor cost performance on the project

• Cost Control : is concerned with ( a) influencing the factors which create changes to the cost base line to ensure that changes are beneficial( b) determining that the cost base line has changed ( c) managing the actual changes as an when they occur. • Includes

• Monitoring the cost performance to detect variances from plan • Ensuring that all appropriate changes are recorded accurately in the cost base line • Preventing inappropriate or unauthorized changes from being included in the cost base line • Informing appropriate stake holders of the authorized changes • Searching out the “Why’s” of both positive and negative variances

• Inputs : Cost Base line , Performance reports , Change requests , cost management Plan • Tools and techniques: Cost change control system : Performance measurement , Additional planning Computerized tools • Outputs : Revised cost estimates , Budget updates , Corrective action

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Estimates at completion : An EAC is a forecast of the total project costs based on project performance • Forecasting techniques 1. EAC : Actual’s to date + the remaining project Budget modified by a performance factor 2. EAC : Actual’s to date + a new estimate for the remaining work 3. EAC : Actual’s to date + remaining budget


								
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