Project Cost Management

Plan Cost Management

• Plan Cost Management involves creating a clear strategy for handling project costs, including estimation, budgeting, monitoring, and control
• It provides a roadmap for managing project expenses from start to finish
• The process occurs once or at specific project milestones

Estimate Costs

• Estimate Costs means determining the approximate cost of the resources required for a project
• It helps understand how much money is needed to bring a project to life
• This is not a one-time task, and is revisited throughout the project

Reserve Analysis

• Reserve analysis prepares for the unexpected by analyzing project management plan components
• It creates reserves for schedule duration, budget, estimated costs, or overall project funding
• Contingency reserves are a key tool, built into the cost baseline to address identified risks or "known-unknowns"
• These reserves cover unpredictable costs and can be applied at various levels, from specific activities to the entire project
• Reserves can be based on a percentage of estimated costs, a fixed number, or developed through quantitative analysis
• Reserves should be clearly documented in the cost plan
• Contingency reserves are a strategic part of the cost baseline, keeping projects on track when surprises occur

Cost of Quality (COQ)

• COQ delivers exceptional results through balanced costs
• Prevention costs are investments to avoid poor quality
• Appraisal costs are checks and balances to confirm progress
• Failure costs (internal/external) address fixing mistakes and stakeholder dissatisfaction
• Optimal COQ balances prevention and appraisal to minimize failure costs

Determining the Budget

• Budget determination involves compiling estimated costs for individual tasks or work packages to create an approved cost baseline
• The budget provides a clear benchmark for tracking and controlling project performance
• It is a financial blueprint completed once or at specific project milestones
• The budget is the total authorized funds
• The cost baseline includes contingency reserves for the unexpected and excludes management reserves

Cost Aggregation

• Cost aggregation focuses the project's budget
• It combines cost estimates for work packages based on the Work Breakdown Structure (WBS)
• Package estimates are rolled up into higher-level components and then into a full project estimate
• The process ensures every detail is accounted for

Historical Information Review

• Historical data can be used to make project estimates
• Historical data depends on the following key factors:
• Accurate historical data
• Easily quantified parameters
• Flexible model

Funding Limit Reconciliation

• Funding limit reconciliation aligns project spending with funding limits
• Mismatch adjustments between planned expenditures and funds may require rescheduling tasks or adding date constraints

Financing

• Financing refers to securing finds to bring projects to life
• External funding for large-scale projects requires meeting specific requirements

Plan Quality Management

• Plan Quality Management sets quality standards for the project
• It gives a roadmap for managing and verifying quality
• The process occurs once or at milestones during the project lifecycle

Benchmarking

• Benchmarking improves projects by learning from similar projects
• Comparisons are made with projects inside or outside the organization

Brainstorming

• Brainstorming effectively generate a list of ideas quickly
• It sparks creativity and collaboration, generating and analyzing ideas
• Brainstorming includes Subject Matter Experts or Stakeholders

Interviews

• Interviews gather insights directly from stakeholder by asking spontaneous questions
• Can include multiple participants such as Project Members, Executives, or Stakeholders

Cost benefit Analysis

• Cost-benefit analysis weighs the pros and cons of a project
• It evaluates strengths and weaknesses
• Determines project cost-effectiveness

Multicriteria Decision Analysis

• Multicriteria decision analysis makes informed choices
• It evaluates and ranks ideas on risk, uncertainty, and value
• Prioritization matrices pinpoint issues and identify alternatives

Flowcharts

• Flowcharts, or process maps, visualize how projects unfold through sequenced steps and decision points
• The SIPOC model (Suppliers, Inputs, Process, Outputs, Customers) tracks process aspects and quality costs

Logical Data Mode

• The Logical Data Model has a clear organization, with data from businesses or others
• Potential data integrity or quality issues can be easily pointed out

Matrix Diagrams

• Matrix Diagrams are a tool for uncovering the strength of between various factors, causes, and objectives
• Matrix types include L, T, Y, X, C, or roof-shaped

Mind Mapping

• Mind mapping turns scattered ideas into a visual map

Test and Inspection Planning

• In test and inspection planning, Stakeholder Expectations will be met
• Tests and inspections very by industry , Alpha, Beta, etc.

Plan Resource Management

• Plan Resource Management estimates, acquires, manages, and effectively uses team and physical resources
• This process occurs once or at key points throughout the project lifecycle

Hierarchical Charts

• Hierarchical Charts are good for visually mapping out functions, such as an organization chart
• One is work breakdown structures which splits deliverables, outlines with ease

Organizational Breakdown Structure (OBS)

• OBS focuses on company's existing structure- departments, teams, or units, helpful departments, in one spot

Resource Breakdown Structure

• Resource Breakdown Structure is great for team members and physical resources, at specified levels for planning, tracking, and controlling work

Responsibility Assignment Matrix (RAM)

• Responsibility Assignment Matrix (RAM) is is the tool to keep project team organized on track for team members who are assigned tasks
• RAM is tailored at different levels
• RACI is a chart used in RAM, responsible, accountable, consulted and informed , RAM, project managers can ensure smoother workflows and communication

Text Oriented Formats

• Text Oriented formats are break down key details like responsibilities, authority, skills, and qualifications, as valuable templates during projects

Organizational Theory

• Organizational theory helps show how people, teams, and organizational units work together, and can save time, resources, to develop effective results

Estimate Activity Resources

• Estimate activity ensures the type, quantity, and specifics of needed resources
• Process of getting job done, revisits stay on track.