Project Cost Management
Other considerations:
Though in many application areas, predicting and analyzing the prospective financial performance of the project’s product is done outside of the project, in others, it is included in Project Cost Management:
For example: Capital Facilities Projects
In this case, Project Cost Management will draw on other general management areas:
- Return on Investment (ROI)
- Discounted Cash Flow
- Investment Payback Analysis
Project Cost Management must consider the needs of the stakeholders who may measure costs in different ways and at different times.
The Develop Project Management Plan process produces a Cost Management Plan that sets out the format and established the criteria for planning, structuring, estimating, budgeting and controlling project costs.
Cost Aggregation:
Schedule activity cost estimates are aggregated by work package in accordance with the WBS
In turn, work package estimates are further aggregated according to schedule structure or other parameters, such as control account, and ultimately for the entire project.
Reserve analysis:
Establishes contingency and management reserves, i.e. allowances for unplanned, but potentially required, changes (see next slide)
Parametric Estimating:
Described in Cost Estimating
Funding Limit Reconciliation:
Since large variations on periodic expenditures are undesirable for organizational operations, the project expenditure of funds is reconciled with funding limits set by the customer or performing organization
May necessitate the scheduling of work to be smoothed and adjusted to limit expenditures in certain periods
Involves setting date constraints and iteratively re-scheduling and budgeting
Requested Changes
Budget increases or decreases can be identified from the analysis of performance – processed for review and disposition through the Integrated Change Control process
Recommended Corrective Actions
Anything done to bring future project performance back in line with the project management plan
In cost management, can involve adjusting schedule activity budgets to fund actions to address cost variances
Updates to Organizational Process Assets
Documentation of lessons learned linked to root cause of variances and corrective actions taken
Updates to Project Management Plan
Schedule activity, work packages or planning package cost estimates
Cost baselines or cost management plan
Approved changes are integrated to the project management plan
