Project Cost Management is defined as the process of planning and controlling the project cost effectively. It defines what costs are required for each deliverable. The cost of the project can be estimated from various process sources (Examples below)
The inputs of cost management include,
While, the output of this is
Creating estimation and costing for project is an extremely crucial part of any project management. Various things are taken in consideration while calculating budget for project like labor costs, necessary equipment acquisition, material costs, etc.
Project Cost Estimation is defined as the process of approximating the total expenditure of the project. The accuracy of the cost estimation depends on the accuracy and details of the project scope, which is the scope baseline. The scope will also define any constraints like date, resources or budget. The risk register will help to calculate estimate types of costs, the expenses made behind the contingent action and the expenses made to cope with risks.
To estimate the cost of project you have to categorize various cost types into categories like
To estimate project cost formally there are few methods (techniques) used as follows:
This estimating technique is based on expert judgments and information based on similar previous projects. Where previously done similar project cost is considered with plus or minus of 20% for existing project.
Past data or record is used to estimate cost for the current project.
Once you have defined the scope of the project, it is the most reliable form of technique. In this technique, based on WBS, you estimate the cost for each resource or deliverables.
Likewise, there are other methods (techniques) which could be useful for estimating cost like PERT estimating, vendor bid analysis, etc.
The main purpose of this activity is to allocate and authorize the monetary resources required to complete the project. The main output for determining the budget includes cost performance baseline. It not only specifies what cost will be incurred but also when costs will be incurred. The inputs for determining budget includes
The output of this process is
The project budgeting is performed in parallel with the project scheduling process. It is highly dependent on three component -
During project budgeting, project manager communicates with different people responsible for managing the work efforts as well as estimating project costs.
He will use various project prospects like work breakdown structure of the project, the cost estimates, historical data and records, resource information, and policies.
Without risk assessment, the budgeting process is not completed. Risk assessing process considers factors like time shortage, availability of resources, development team experience, the technology used, etc. The risk assessment can be an amount between 25 and 30 percent of the overall project cost.
The quality management process group consists of three processes,
Plan Quality process involves identifying which standard quality are relevant to the project and how to fulfill them. It also includes identifying quality metrics and standard measures for project processes, regulatory compliance requirements, product functionality, documentation, etc.
The inputs of the plan quality management includes
The output for the quality management is
This stage includes mainly two activity, first analyzing project quality and improve project quality. It is a process of auditing the quality requirements and the results from quality control measurement to ensure that quality standard is maintained throughout the process. The input for this will be same as the output of plan quality management while the
The output of this process will be
This will be conducted to control quality throughout the project life cycle. It defines how the quality standard can comply with the defined quality standards. The output of Quality Assurance will be the input for Quality Control. While the output will
HR management includes the process of organizing, managing and leading the project team. It is comprised of the people with allocated roles and responsibilities for completing the project. The HR management will deal with four processes.
The input for this will
The output for this will be
This stage confirms the availability of the human resource and obtaining the team necessary to complete project activities. The input for this stage would be the output from the previous step. While the output of this stage would be
In this stage, the focus is improving the team efficiency, team member interaction and enhancing overall team and project performance. The input for this stage would be the output from the previous step. While the output for this stage would be
This process includes tracking team member performance, resolving issues, providing feedback and managing a team to optimize project performance. The input for this stage would be the output from the previous step. While the output for this stage would be
Here, Project Communication does not mean interacting verbally with each other, but transmitting project related information effectively with the project team, stakeholder, project managers, etc. It should address risk actions and assessments, project plans, meeting management and actions, reviews and walk-throughs, etc.
This segment cover mainly five areas
It is the process of developing an approach to communicate with stakeholders efficiently and understanding their requirements. The input for this would be
While the output for this will be
It is the process of storing, distributing, collecting, and retrieving of project information in accordance with a communication plan. The input of this stage would be
While the output would be
It is the process of controlling and monitoring communication throughout the entire project lifecycle. The input for this stage would be
While the output of this stage would be
Summary
Cost management is the process of planning and controlling the project cost effectively. It helps you to record and track the expenses made after the project.
To see that your project is completed in a given timeline and budget, we will see what risk factor needs to mitigate in next tutorial.