WELCOME TO OUR PRESENTATION

PROJECT COST MANAGEMENT

KAreas 10 Initiating Planning Executing M&C Closing Total

4. Integration 1 1 2 2 1 7

5. Scope 0 4 0 2 0 6
6. Schedule 0 5 0 1 0 6

7. Cost 0 3 0 1 0 4
8. Quality 0 1 1 1 0 3
9. Resource 0 2 3 1 0 6

10. Comm 0 1 1 1 0 3

11. Risk 0 5 1 1 0 7
12. 0 1 1 1 0 3
Procurement

13. 1 1 1 1 0 4
Stakeholder

Total 2
Prepared By: Hsaung Hnin Phyu,24
PMP 10 12 1 49
PMBOK GUIDE
SIXTH EDITION

Short Notes 95

Earned Schedule Theory (Trend & Emerging Practice – Page 233)

- Schedule Variance = Earned Schedule ES – Actual Time AT
- Schedule Performance Index = ES / AT
This process is performed once or at predefined point in a project

Alternative analysis
PMBOK GUIDE
SIXTH EDITION

Short Notes 96

Cost Management Plan

1. Units of measure
2. Level of precision
3. Level of accuracy
4. Organizational procedures links
5. Control thresholds
6. Rules of performance measurement
7. Reporting formats
8. Additional details
This process is performed periodically throughout the project

In every estimate process,

basis of estimate is always
output
Rough Order Magnitude Estimate ROM & Definitive Estimate
PMBOK GUIDE
SIXTH EDITION

Short Notes 58

Analogous Estimating Technique

- Top down estimate
- Gross value estimate
- Type of expert judgment
PMBOK GUIDE
SIXTH EDITION

Short Notes 31
Reserves Analysis
- An approved change request is not required to access the contingency reserve
- Management reserve & contingency reserve are decided in estimate cost process
- Reserve analysis is used in Estimate activity duration, Estimate Cost, Determine budget,
Control cost & Monitor risk processes
- Reserve analysis is performed to determine if the remaining reserves are sufficient to
for the risk remaining in the project and to determine if adequate reserve have been set
aside to address identified risks as well as uncertainty in schedule duration, budget, funds
or estimated costs for the project.
- When opportunities are captured resulting in cost savings, fund may be added to the
contingency amount.
Presented By: Hsaung Hnin Phyu, PMP ®
PMBOK GUIDE
SIXTH EDITION

Short Notes 61

Cost of quality
- Cost of quality is what you get when you add up the costs of all the prevention &
inspection activities you are going to do on your project.
- It doesn’t just include the testing, it includes any time spent writing standards, reviewing
documents, meeting to analyze the root cause of defects, rework to fix the defects once
they are found by the team-absolutely everything you do to ensure quality on the project
This process is performed once or at predefined point in the project

The cost baseline is the approved version of the

time-phased project budget that includes contingency
reserves, but excludes management reserves
PMBOK GUIDE
SIXTH EDITION

Short Notes 56

Determine budget
- Cost baseline is main output
- The process of aggregating the estimated costs of individual activities or work packages
to establish an authorized cost baseline
- Any significant changes in a country’s economic policy would likely affect the currency
exchange rates. Project manager will need to account for these fluctuations in exchange
rates when determining project budget
PMBOK GUIDE
SIXTH EDITION

Short Notes 12

Funding Limit Reconciliation

- Project funding often occurs in incremental amount

- To prevent project available capital exhausted & suspension of project activities
- A process of comparing the planned expenditure of project funds against any limits
on the commitment of funds for the project to identify any variance between the funding
limit & the planned expenditures
- T&T in Determine Budget process
PMBOK GUIDE
SIXTH EDITION

Short Notes 2

Project Life Cycle

- Cost & staffing levels are low at the start of the project
- Risk & uncertainty are greatest at the start of the project
- The ability to influence the final characteristics of the project’s product is the highest
at the start of the project
- The project life cycle is the series of phases that a project passes through from its start
to its completion
Control cost => Cost Forecasts
Control schedule => Schedule Forecasts
Trend Analysis – examines project performance over time if performance is improving or
deterioration

S Curve
PMBOK GUIDE
SIXTH EDITION

Short Notes 63

Relationship between cost of change

& Risk of project
- The cost of making changes and
correcting errors typically increases
substantially as the project
approaches completion
- The cost of changes is nearly equal
to project risk
- - Cost & staffing levels are low at the start of the project
- Risk & uncertainty are greatest at the start of the project