IT212 – IT PROJECT MANAGEMENT

Lecture 6
Project Cost Management

MSLagmay
Objectives

• Understand Cost estimates and budget with cost accounts to plan project
expenditures
• Develop cost summaries for tracking project expenditures to budgeted costs
• Explain cost forecasts to proactively control future planned expenditures
Project Cost
Management
Project Time Management includes the processes involved in
estimating, budgeting, and controlling costs so that the
project can be completed within the approved budget.
Project Cost Management
Overview
Project Cost Management process includes:

Estimate Cost – The process of developing an approximation

of the monetary resources needed to complete project
activities.
 • Cost Estimates are prediction that is
based on the information known at
a given point in time
Cost Estimates
• Cost Estimates are generally
expressed in units of some currency
Cost Estimates
Cost Estimates
Determine Budget – The process of aggregating the
estimated cost of individual activities or work packages to
establish an authorized cost baseline.
 • The baseline includes all authorized
budgets, but excludes management
Determine reserves
Budget
• Project Budget constitute the funds
authorized to execute the project
Determine Budget
Determine Budget
Control Costs – The process of monitoring the status of the
project to update the project budget and managing changes
to the cost baseline.
 • Involves recording actual cost spent
to date
Control
Costs • Involves analysing the relationship
between the consumption of the
project funds to the physical work
being accomplished
Control Costs
Control Costs