Estimate: prepared by team to mention how much required as cost.

Budget: management approved estimate BAC

Price: you charge to customer

Terms to Know
Intro Actual Cost: spent money/Sunk cost

Contingency Reserve – Risk Identified by PM

Reserves: money to handle risks. Management Reserve – Risk Not-Identified by PM

Quantitative Risk Analysis

Reserve value?
% of Project Value

Plan Cost Mgmt

Planning Estimate Costs

Determine Budget Baseline Cost

Process
MOCO Control Costs Cost Performance Review, Forecast & Rebaseline

Overrun Subtopic

Terminate the project

Poor cost mgmt. implications
Cost Mgmt Compromise on deliverables/ Quality

Damage brand reputation

Fail compliance

Improper estimation
Why?
Purpose
Increase in raw material cost/ economic factors

Poor execution

Poor cost mgmt. Reasons Improper reporting of cost

Improper tracking of cost

Missed scope during estimation

Scope creep; gold plating

Adhoc request by Stk

Key Governance Focus is on Budget/ Cost Mgmt

EVM Forumula
ExamTips
Do not consume Mgmt Reserve without appoval.