Cost Data Management

Data Collection and Cost Aggregation

• Gathering cost data from various departments, teams, or sources within the organization.
• Ensuring the data is accurate, up-to-date, and categorized correctly.
• Cost categorization involves grouping costs into categories such as labor, materials, overhead, and other relevant classifications.
• Summing costs involves combining costs by summing up individual costs within each category and across all categories to get a total cost.

Cost Analysis and Reporting

• Analyzing combined costs to identify trends, cost overruns, or areas where savings can be made.
• Generating reports for stakeholders to provide transparency and support decision-making.

Creating an Accurate Project Budget and Forecast

• Seeing total costs per category and per key deliverable.
• Seeing expected spending through the project schedule.
• Assisting in tracking project spending against the budget.
• Providing financial control.

Estimating Costs - Methods

• Expert Judgement: asking someone who has done a similar project before.
• Analogous Estimating (Top-Down): looking at a similar project's cost estimations/historical data.
• Parametric Estimating: using a statistical relationship with historical data.
• Bottom-Up Estimating: breaking down the project into smaller work packages or tasks.
• Three-Point Estimating (Triangular Distribution): averaging between high, low, and likely cost.
• Beta Distribution Pert (Project Evaluation Review Technique).

3-Point Estimating (Triangular Distribution)

• Most Likely Estimate (M): the most realistic estimate given the information available.
• Optimistic Estimate (O): the best-case scenario estimate.
• Pessimistic Estimate (P): the worst-case scenario estimate.

Project Performance Index

• Schedule Performance Index (SPI): measures how much work has been completed compared to the plan.
• To Complete Performance Index (TCPI): determines whether the remaining work can be completed within the budget.

Stakeholder Management

• A stakeholder is a person or organization that is actively involved in the project or whose interests may be affected by the project.
• Creating a Stakeholder Profile Register is the first step in creating the Stakeholder Register.
• Identifying stakeholders' responsibility, goals, expectations, and concerns.

Risk Analysis

• Performing qualitative and quantitative analysis to identify risks.
• Qualitative analysis involves assessing the likelihood and impact of a risk.
• Quantitative analysis involves gathering information, analyzing it, and updating the risk register.
• Expected Monetary Value (EMV) is a way to quantify risk.

Critical Path Method

• The critical path is the longest timeframe in a project, in this case, Path B - D - E - FIN = 14 days.
• To prove a path is critical, each task in that path must have a float/lag of 0, meaning no extra time for tasks.

Calculating the Backward Pass

• After completing the forward pass, each activity is completed in reverse sequence to find the latest start (LS) and latest finish (LF) times.
• The backward pass helps calculate the float time for each task.

Network Diagram

• A network diagram shows the sequence of activities and their dependencies.
• In this example, there are 5 paths in the network diagram.

Earned Value Management (EVM)

• Earned Value (EV) is the value of work completed to date and the budget planned for that work.
• Actual Cost (AC) is the actual expense incurred by the team.
• Cost Variance (CV) is the difference between EV and AC, indicating if the project is under or over budget.
• Schedule Variance (SV) is the difference between EV and the planned value (PV), indicating if the project is ahead or behind schedule.

Stakeholder Analysis

• Stakeholder analysis identifies and categorizes stakeholders based on their power, interest, and influence on the project.
• The goal is to understand stakeholders' expectations, concerns, and level of participation required.

Analysis Techniques - Power/Interest Grid

• The power/interest grid categorizes stakeholders into four quadrants: high power/high interest, high power/low interest, low power/high interest, and low power/low interest.
• This helps identify significant stakeholders who deserve sustained management attention.

Risk Analysis

• Qualitative analysis determines the likelihood and impact of a risk on the project and budget.
• Quantitative analysis applies numerical values to risks using techniques like expected monetary value (EMV) and probability distribution.
• The risk register is updated based on the analysis, prioritizing high-impact, high-probability risks.

Project Schedule vs. WBS

• A project schedule defines what is happening when and with what resources, showing the sequence of work to complete all deliverables in the WBS.
• A WBS does not have a time component or sequence and is based on deliverables.

Project Schedule Management Processes

• Plan Schedule Management: Identify how to manage the schedule.
• Define Activities: Identify activities needed to produce deliverables.
• Sequence Activities: Identify the order of project activities.
• Estimate Resources: Estimate the resources required for each activity.
• Estimate Durations: Estimate the time needed for each activity.

Critical Path Method

• The critical path is the longest sequence of activities in the project.
• The critical path determines the minimum duration required to complete the project.
• To prove that a path is critical, ensure that the float/lag for each task in this path is 0.

Calculating the Backward Pass

• Once the forward pass is complete, calculate each activity by moving backwards in sequence: LF - D = LS.
• Calculate late start (LS) and late finish (LF) for each activity.

Network Diagram Example

• Create a network diagram to visualize the project schedule.
• Add 1 day to Task C, since it starts 1 day later (after A).
• There are 5 paths in this network diagram.

Beta Distribution PERT

• PERT is a technique used to estimate the time it takes to complete a task.
• The formula for PERT is: M = (O + 4M + P)/6.
• Example: Estimate the time it takes to complete a software development project.

Control Costs

• Control costs involve monitoring the project's status and comparing actual costs to planned costs.
• Update project costs and re-evaluate cost assumptions made during planning.

Project Risk Management

• A risk is an uncertain event or condition that can impact project objectives (scope, schedule, cost, quality).
• Risk management is the process of identifying and planning for risks.
• Risks can have multiple causes, such as requirements, assumptions, constraints, or conditions.
• Risk management involves preparing for risks to minimize their impact on the project.

Project Schedule vs. WBS

• WBS (Work Breakdown Structure) does not have a time component or sequence, and is based on deliverables.
• Project Schedule defines what is happening when and with what resources, and shows the sequence of work to complete all deliverables in the WBS.

Project Schedule Management Processes

• Plan Schedule Management: Identify how to manage the schedule.
• Define Activities: Identify activities that must be performed to produce deliverables.
• Sequence Activities: Identify the order of project activities.
• Estimate Resources: Estimate the resources required.
• Estimate Durations: Estimate the time needed for each activity.

Earned Value Management

• Earned Value (EV) = QAR 9,000.
• Actual Cost (AC) = QAR 11,200.
• Estimate at Completion (EAC) = QAR 15,000 (over budget).
• To Complete Performance Index (TCPI) = 3.75 (to determine if the budget is reasonable).

Project Stakeholder and Communications Management

• Stakeholders are individuals who need to be informed about the project.
• The project manager needs to understand stakeholders' expectations, roles, and how they can influence and get involved in the project.

PMBOK Risk Management Processes

• Plan Risk Management: Determine how to perform project risk management.
• Identify Risks: Document risks that may affect the project.
• Perform Qualitative Risk Analysis: Prioritize risks for further analysis.
• Perform Quantitative Risk Analysis: Use numerical models for risk analysis.
• Plan Risk Responses: Develop options, actions, and contingency plans.
• Monitor and Control Risks: Start and manage the risk plan.

Risk Management

• Risk Categories: Broad categories of risk that the project is vulnerable to.
• Risk Breakdown Structure (RBS): Breaks down risk categories into specific components related to the project.
• Guidelines for determining potential impact: Define impact levels for time and budget.
• Probability Scale: Define probability levels used for risk analysis.

Expected Monetary Value (EMV)

• EMV is calculated by multiplying the probability of a risk by its impact.
• EMV can be applied in two ways:
  • Calculate the total EMV for all risks to determine the budget required to account for them.
  • Calculate the monetary value of a decision to determine its feasibility.

Risk Response

• Avoid: Prevent the risk from happening.
• Mitigate: Take action to reduce the risk's impact.
• Transfer: Pay someone else to accept the risk.
• Accept: Accept the risk if it cannot be avoided, mitigated, or transferred.