1. PMI Project Management
Professional (PMP)® Workshop

2. Project Cost Management
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3. Project Cost Management
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Integration
Scope
Time
Cost
Quality
Human Resource
Communications
Risk
Procurement
Stakeholder

4. Cost Management Overview
 Project Cost Management includes the processes involved in
planning, estimating, budgeting and controlling costs so that the
project can be completed within the approved budget
 Life cycle Costing: A broader view of Project Cost Management that
includes cost of using, maintaining and supporting the product,
service or result of the project.
 The cost management plan is a part of the project management plan.
 The techniques for estimating the cost involved in performing each
of the project activities are the same as estimating the time required.
 Expert judgment, analogous estimating, bottom up estimating and
reserve analysis are some of the techniques used in cost
management.
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5. 7.1 Plan Cost
Management—
The process that
establishes the policies,
procedures, and
documentation for
planning, managing,
expending, and
controlling project costs.
7.2 Estimate Costs—
The process of
developing an
approximation of the
monetary resources
needed to complete
project activities.
7.3 Determine
Budget—
The process of
aggregating the estimated
costs of individual
activities or work
packages to establish an
authorized cost baseline.
7.4 Control Costs—
The process of
monitoring the status of
the project to update the
project costs and
managing changes to the
cost baseline.
Cost Management Processes
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6. Plan Cost Management
Inputs
• Project
management
plan
• Project charter
• Enterprise
environmental
factors
• Organizational
process assets
Tools&Techniques
• Expert
Judgment
• Analytical
techniques
• Meetings
Outputs
• Cost
management
plan
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Guides on how costs are managed throughout the project course

7. Cost Management Plan (Output)
Inputs
Project Management Plan gives Scope baseline,
Schedule baseline and other information like cost-relating
scheduling and risks as inputs
Project Charter provides summary budget
Enterprise environmental factors like org.
structure, location, currency rates are inputs
because they can affect the cost
Org. process assets like historical data will be useful for
cost planning
Tools & Techniques
Expert Judgment is helpful for planning and controlling
costs
Analytical techniques like Decision Making Tools can
help in making important strategic or purchasing
decisions
Meetings help in discussing and finalizing the cost
management plan
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8. Cost Management Plan
(Part of “Develop Project Management Plan”)
Note: This is the Output from Cost Management Process
 Sets out format and establishes the criteria for planning,
structuring, estimating, budgeting and controlling project cost
Example: Cost Management Plan may establish:
 Precision level (e.g. $100, $1000)
 Units of measures (staff hours, staff days)
 Organizational procedures links
 Control thresholds
 Earned value rules
 Reporting formats
 Process descriptions
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9. Estimate Costs
 Rough Order of Magnitude (ROM): Accuracy of project
estimate will increase as the project progresses
 During initiation: -50 to +100%
 Definitive : - 5 to +10 %
 Estimates include (not limited to) : labor, material,
equipment, services, facilities as well as inflation
allowance, contingency costs
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10. Estimate Costs
Determines the amount of cost required to complete the project
Note: Cost estimates are a prediction that is based on the information known at a given
point in time.
Inputs
• Cost management
plan
• Human resource
management plan
• Scope baseline
• Project schedule
• Risk register
• Enterprise
environmental factors
• Organizational
process assets
Tools&Techniques
• Expert Judgment
• Analogous estimating
• Parametric estimating
• Bottom-up estimating
• Three-point
estimating
• Reserve analysis
• Cost of quality
• Project management
software
• Vendor bid analysis
• Group decision-
making techniques
Outputs
• Activity cost
estimates
• Basis of estimates
• Project documents
updates
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11. Estimate Costs
Inputs
Cost Management Plan gives guidance on how to
manage costs
HR Management Plan gives staffing details
Scope baseline provides scope/WBS details for
which estimates are to be made
Project Schedule, Risk Register, Enterprise
environmental factors and Org. process assets are
the other inputs
Tools & Techniques
Expert Judgment is helpful for planning and
controlling costs
Analogous estimating, Parametric estimating,
Bottom-up estimating, Three-point estimating
and Group Decision making techniques are
different estimation techniques
Reserve Analysis, Cost of Quality and Vendor Bid
Analysis are used in estimation assumptions to
calibrate estimations
PM Software will help to speed up estimation
process to consider various alternatives quickly
• Activity cost estimates
• Basis of estimates
• Project documents updatesOutputs
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12. © 2016 Skillogic Knowledge Solutions. All Rights Reserved12
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