Project management plan: scope baseline, schedule baseline, other information

Project Charter: Specifies the overall project budget from which detailed project costs can be determined

business environment factors

organizational process assets

cost management plan

Step 1. Identify and analyze the component accounts of the cost. The main task of this part is to determine the types of material resources (people, equipment, materials) required to complete the project activities to form "resource requirements"

Step 2: Estimate the cost of each account based on the identified project cost components. Based on the resource requirements in step 1, consider the cost of all resources needed for the project

Step 3: Analyze the cost estimation results, find out various costs that can replace each other, and coordinate the proportional relationship between various costs

Cost Management Plan: Specifies how project costs will be managed and controlled, including methods for estimating activity costs and the accuracy required

Human resources management plan: Provides project staffing status, labor rates and related reward/recognition plans, which are factors that must be considered when formulating project cost estimates.

Scope Baseline

Project schedule

risk register

Organizational process assets: including cost estimation policies, cost estimation templates, historical information, and lessons learned

Business environment factors: market conditions, released business information, etc.

Activity cost estimates

Estimate basis

Project file updates

Cost Management Plan: Describes how project costs will be managed and controlled

Scope Baseline

Activity cost estimate: After summarizing the cost estimate of each activity in each work package, the cost estimate of each work package is obtained.

Basis of estimate: Include basic assumptions in the basis of estimate, such as whether overhead or other costs should be included in the project budget

Project schedule: Includes planned start and finish dates for project activities, milestones, work packages, and control accounts. This information is used to summarize planned and actual costs into corresponding calendar periods.

Resource Calendar: Understand the types and usage times of project resources from the resource calendar, and determine the resource costs at each stage of the project cycle based on this information.

Risk Register: Review the risk register to determine how to aggregate risk response costs, updates to the risk register are included in project document updates

Agreements: When developing a budget, consider the cost of products, services or results to be or have been purchased, as well as applicable agreement information

organizational process assets

cost basis

Project funding requirements

Project document updates: including risk register, activity cost estimates, project schedule, etc.

Influence factors that cause cost baseline changes

Ensure all change requests are processed promptly

Manage changes as they actually occur

Ensure that cost expenditures do not exceed the approved funding limit, neither exceeding the limit allocated by time period, by WBS structure, by activity, nor exceeding the total project limit

Monitor cost performance and identify and analyze deviations from cost baselines

Monitor work performance against capital expenditures

Prevent unapproved changes in cost or resource usage reports

Report all approved changes and their associated costs to relevant stakeholders

Try to keep expected cost overruns within acceptable limits

Project management plan: cost baseline, cost management plan

Project funding requirements: Includes project expenses plus estimated debt

Work performance data: data about the progress of the project, such as which activities have been started, how they are progressing, and which deliverables have been completed, etc.

Organizational process assets: such as policies, procedures and guidelines related to cost control, cost control tools, available monitoring and reporting methods

Work performance information: The CV, SV, CPI, SPI, TCPI and VAC values ​​of each component of the WBS need to be recorded and communicated to stakeholders

Cost forecast: Whether it is a calculated EAC value or a bottom-up estimated EAC value, it needs to be recorded and communicated to stakeholders

Change Requests: After analyzing project performance, change requests may be made to the cost baseline or other components of the project management plan

Project management plan updates: including updates to cost baselines and cost management plans

Project document updates: including updates to cost estimates and estimates basis

Organizational process asset updates: causes of deviations, corrective actions taken and justifications, financial database, other lessons learned from project cost control

Payback period: refers to the time that elapses when the future net cash flow of an investment project is equal to the original investment amount.

Return on investment ROI: refers to the value that should be returned through investment, that is, the economic return that a company gets from an investment activity

Internal rate of return (IRR): It is the discount rate that makes the net present value of the investment project equal to zero, reflecting the real return of the investment project.

Cash flow discounting: It is to restore the expected cash flow of the enterprise in a specific future period to the current present value.

Net present value (NPV): refers to the difference between the present value of cash inflows expected to be realized by a project and the present value of cash expenditures to implement the plan.

Based on historical information, expert judgment can provide valuable insights into the project environment and information about previous similar projects

Conduct planning meetings to develop cost management plans

Cost analogy estimation refers to estimating similar parameters or indicators of the current project based on parameter values ​​(such as scope, cost, budget, and duration, etc.) or scale indicators (such as size, weight, complexity, etc.) of similar projects in the past.

When estimating costs, this technology uses the actual costs of similar projects in the past to estimate the cost of the current project.

This technique is often used to estimate cost values ​​when there is insufficient project detail, such as in the early stages of a project.

Analogous estimating is generally less expensive and time-consuming, but also less accurate

Analogous estimation can be used in conjunction with other methods

Parametric estimating refers to the use of statistical relationships between historical data and other variables, such as square footage in building construction, to estimate the cost of project work

The accuracy of parameter estimation depends on the maturity of the parameter model and the reliability of the underlying data

Parameter estimation can be used in conjunction with other methods

Bottom-up estimating is a method of estimating work components

Start by developing the most specific, detailed estimate of the cost of an individual work package or activity

These detailed costs are then reported or “rolled” up to a higher level for subsequent reporting and tracking.

Bottom-up accuracy, and its required cost, often depends on the size and complexity of the individual activity or work package

Use three estimates to define approximate ranges for activity costs by taking into account uncertainty and risk in estimates

Most likely cost (Cm): The cost of an activity based on a more realistic estimate of the work required and related expenses.

Most Optimistic Cost (Co): The activity cost obtained based on the best case scenario of the activity

Pessimistic cost (Cp): the activity cost based on the worst case scenario of the activity

Use the formula to calculate expected cost cE

A contingency reserve is usually a portion of the budget that is used to deal with known-unknown risks that could affect the project.

Management reserve is a project budget specifically set aside for management control purposes to deal with unforeseen work within the project scope.

Management reserves are used to address “unknown-to-unknown” risks that may affect the project

Management reserves are not included in the cost baseline but are part of the funding requirements of the overall project budget

When management reserves are used to fund unforeseen work, the used management reserves are added to the cost baseline, resulting in a change in the cost baseline.

During the cost estimating process, it may be necessary to analyze project costs based on bids from qualified sellers

Team-based methods (e.g., brainstorming, nominal group techniques) can engage team members to improve estimation accuracy

First, the cost estimate is summarized into the work package in the WBS, and then the work package is summarized to a higher level of the WBS (such as the control account), and finally the total cost of the entire project is obtained.

Reserve analysis can be used to monitor the use of contingency and management reserves within a project to determine whether these reserves are still needed or whether additional reserves need to be added.

There may be some historical relationships between relevant variables that can be used for parameter estimation or analogy estimation.

Based on these historical relationships, project characteristics (parameters) can be used to build mathematical models to predict the total project cost.

Balance capital expenditures against any restrictions on project funding

If discrepancies between funding limits and planned disbursements are discovered, the work's schedule may need to be adjusted to balance the level of funding expenditures

It is a method that comprehensively considers scope, schedule and resource performance to evaluate project performance and progress.

Planned Value (PV)

Earned Value (EV)

Actual Cost (AC)

Forecast the Estimate at Completion (EAC), which may differ from the Budget at Completion (BAC)

A bottom-up aggregation method performed manually by project managers and project teams is the EAC forecasting method

Formula: EAC=AC Bottom-up ETC (ETC is the estimated completion of the remaining work)

The most commonly used method one

The second most commonly used method

The three most commonly used methods

TCPI refers to the cost performance indicator that must be achieved by the implementation of the remaining work in order to achieve specific management goals (such as BAC or EAC)

If it is apparent that BAC is no longer feasible, the project manager should consider using EAC for TCPI calculations

TCPI formula based on BAC: TCPI=(BAC-EV)/(BAC-AC)

If the cumulative CPI is lower than the baseline, then all remaining work on the project should be performed immediately according to the TCPI (BAC) to ensure that the actual total cost does not exceed the approved BAC. As for whether the required performance level is feasible, it needs to be judged after considering a variety of factors (including risk, schedule, and technical performance). If it is not feasible, the future required performance level of the project needs to be adjusted to TCPE (EAC). TCPI formula based on EAC: TCPI=(EAC-EV)/(EAC-AC)

Performance reviews include changes in cost performance over time, schedule activities or work packages that are over and under budget, and estimates of funds required to complete the work.

Deviation analysis

Trend analysis: designed to examine changes in project performance over time to determine whether performance is improving or deteriorating

Earned Value Performance: Compares actual schedule and cost performance to a performance measurement baseline. If EVM is not used, the actual cost of completed work needs to be compared and analyzed with the cost baseline to examine cost performance.