Features
Features:

Product Tour >

Edraw AI >

Paid Plans:

Individuals >

Business >

Eduaction >
Resources
Blog

History

How-tos & Tips

Discovery

Biography

Business Analysis

Examples

AI concept Map

Free AI Mind Map Generator

Onenote Mind Map

Bcg Matrix Examples

Nike Marketing Strategy

Unilever SWOT Analysis

Make Mind Maps in Google Docs

Guide

FAQs

What's New

Resource Center
Templates
All Templates

Brain Storming Templates

Strategy and Planning Templates

Project Management Templates

Product Management Templates

Human Resources Templates

Agile Workflow Templates

Marketing Templates

Education Templates

Fun and Games Templates

User Gallery
Download
Pricing
Enterprise

PMP-7 Cost Management

This mind map is for Xisai PMP, Chapter 7 - Cost Management - Summary of knowledge points, At the same time, there are PMP test questions with relevant knowledge points. From knowledge points to corresponding test questions, you can deepen your understanding of knowledge points!

Edited at 2023-04-07 17:40:42

PlotWizard

Recent works View more works>>

PMP-7 Cost Management

PlotWizard

Recent works View more works>>

Recommended to you
Outline

Cost Flows
- 52
ugeneg@yahoo.com
cost control ideas
- 57
- 1
PlotWizard
Financial management mind map
- 39
- 1
PlotWizard
Cost management mind map
- 74
PlotWizard
Logistics cost management mind map
- 37
PlotWizard
Project management cost management mind map
- 19
PlotWizard
cost management
- 29
PlotWizard
cost management
- 26
- 1
PlotWizard
Chapter 8 Cost Management
- 25
PlotWizard
Financial Cost Management 2022
- 14
PlotWizard

PMP-7 Cost Management

Concepts in cost management

Fixed costs and variable costs

1. Cost = fixed cost output × variable cost

2. Sales = sales volume × unit price

3. Profit = sales - cost

direct costs and indirect costs

1. Direct costs

definition

Can be tracked economically within a project, usually as the cost of resources dedicated to a project

Example

Raw materials, material fees, design fees, team member salaries

Control

project manager

2. Indirect costs

definition

Resources that cannot be tracked economically within a project and are usually the cost of resources shared between several projects or projects and functional businesses

Example

Senior staff salaries, organizational management fees, company rental space

Control

senior management

opportunity cost, marginal cost, sunk cost

1. Opportunity cost

Refers to the maximum value of giving up something else in order to obtain something

A:50W B:100W C:150W

2. Marginal cost

The increase in total cost brought by each unit of newly produced products (or purchased products)

Such as the cost of producing mobile phones

3. Sunk costs

Refers to expenses that occurred in the past but are irreversible and have nothing to do with the current decision.

Steps to cost management

planning cost management

1. definition

The process of determining how to estimate, budget, manage, monitor, and control project costs

2. effect

Provide guidance and direction on how to manage project costs throughout the project

3. process

4. cost management plan

Is the component of the project management plan that describes how project costs will be planned, scheduled, and controlled

Estimate cost

1. definition

The process of making an approximate estimate of the cost of resources required to complete project work.

2. effect

Determine the funding required for the project

Conducted regularly throughout the project as needed

3. process

4. Tools & Techniques

expert judgment

It refers to a reasonable judgment about current activities based on professional knowledge in an application field, knowledge field, discipline, industry, etc.

In the PMI system, experts refer to individuals or groups who have relevant professional knowledge or have received relevant training.

Such as other departments, consultants, stakeholders, technical associations, industry associations, subject matter experts, PMO

analogy estimation

Using information from previous similar projects to make estimates cannot reach the planning package level

three point estimate

Accounting for risk and uncertainty in estimates, inability to reach planning package level

Uncertainty

risk

parameter estimation

Using statistical relationships between historical data and other variables to estimate cannot achieve cost control at the planning package level.

Bottom-up estimation

If you need to control costs at the planning package level, you can use bottom-up estimating. Bottom-up estimating is the most specific and detailed estimate of the cost of a single work package or activity, and then summarizes or "rolls" these detailed costs upwards. "To higher levels, such as planning packages, bottom-up estimation requires the use of WBS

5. Level of Cost Estimate

6. output

Cost Estimate

include

Possible costs to complete the project work

Contingency reserves for identified risks

and a quantitative estimate of management reserves to deal with unplanned work

Cost estimates can be summarized or detailed

Cost estimates should cover all resources used on the project, including (but not limited to) direct labor, materials, equipment, services, and some special cost categories such as financing costs (including interest), inflation allowances, exchange rates, or cost contingency reserves . If indirect costs are also included in the project estimate, indirect costs can be charged at the activity level or higher.

Budgeting

1. definition

The process of summarizing the estimated costs of all individual activities or work packages to establish an approved cost baseline

2. effect

Establish a cost baseline against which project performance can be monitored and controlled

This process is performed only once or only at predefined points in the project

3. Compared

project budget

All funds approved for project execution

cost basis

Approved project budget allocated by time period, including contingency reserves but excluding management reserves

4. process

Control costs

1. definition

Monitor project status to update project costs and manage the process of cost baseline changes

The team has been assigned tasks and needs to add resources, but there is no budget. Therefore, to solve this problem, the project budget should be obtained first so that resources can be added.

2. effect

Maintain cost baselines throughout the project

This process needs to be carried out throughout the project

3. Budget increases can only be made with approval from the Implementation of Integrated Change Control process

The key to effective cost control is managing an approved cost baseline

4. process

5. Tools & Techniques

Earned Value Analysis (EVA)

Earned Value Analysis

is a commonly used performance measurement method that can take many forms

It comprehensively considers project scope, cost and schedule indicators to help the project management team evaluate and measure project performance and progress

Planned Value (PV)

Planned Value

The budget allocated and approved for the scheduled work schedule of an activity or WBS component

Scheduled work progress budget

Earned Value (EV)

Earned Value

The value of work completed for a project activity or WBS component

value of work completed

Actual Cost (AC)

Actual Cost

The total costs actually incurred and recorded to complete the work of the activity or component of the WBS

actual total cost incurred

Schedule Variance

SV=EV-PV

Schedule Variance = Earned Value – Planned Value

Cost Variance

CV=EV-AC

Cost deviation = Earned value – Actual cost

Schedule Performance Index

SPI=EV/PV

Schedule Performance Index = Earned Value/Planned Value

Cost Performance Index

CPI=EV/AC

Cost performance index = earned value/actual cost

Deviation analysis

CPI=EV/AC=270/300=0.9, the cost performance index is less than 1, and the cost overrun is 10%, which is already a problem

trend analysis

Earned Value Analysis (EVA)

Earned Value Analysis

is a commonly used performance measurement method that can take many forms

It comprehensively considers project scope, cost and schedule indicators to help the project management team evaluate and measure project performance and progress

Planned Value (PV)

Planned Value

The budget allocated and approved for the scheduled work schedule of an activity or WBS component

Scheduled work progress budget

Earned Value (EV)

Earned Value

The value of work completed for a project activity or WBS component

value of work completed

Actual Cost (AC)

Actual Cost

The total costs actually incurred and recorded to complete the work of the activity or component of the WBS

actual total cost incurred

Schedule Variance

SV=EV-PV

Schedule Variance = Earned Value – Planned Value

Cost Variance

CV=EV-AC

Cost deviation = Earned value – Actual cost

Schedule Performance Index

SPI=EV/PV

Schedule Performance Index = Earned Value/Planned Value

Cost Performance Index

CPI=EV/AC

Cost performance index = earned value/actual cost

1. BAC

completion budget

2. EAC

Completion Estimate

1. most accurate

EAC=AC bottom-up ETC

2. Assume it will be completed at budgeted unit price

EAC=AC (BAC-EV)

3. Assuming done at current CPI

EAC=BAC/CPI

3. ETC

Completion needs to be estimated

Reserve analysis

1. Reserve analysis

Targeting risks

contingency reserve

within benchmark

sometimes called progress reserve

Known-Unknown Risks

management reserve

Outside the benchmark

Reserve analysis is used to determine the contingency reserves and management reserves required for the project

When making duration estimates, consider contingency reserves (sometimes called "schedule reserves") to account for schedule uncertainty

1. A contingency reserve is a period of time included in the schedule baseline to address identified risks that have been accepted

2. Contingency reserves are related to "known-unknown" risks and need to be reasonably estimated to complete unknown workloads

3. The contingency reserve can be a certain percentage of the estimated activity duration or a fixed period of time, or the contingency reserve can be separated from each activity and aggregated

4. As project information becomes clearer, contingency reserves can be drawn upon, reduced, or eliminated. Contingency reserves should be clearly outlined in project progress documents.

2. Earned Value Analysis (EVA)

Earned Value Analysis (EVA)

Earned Value Analysis

is a commonly used performance measurement method that can take many forms

It comprehensively considers project scope, cost and schedule indicators to help the project management team evaluate and measure project performance and progress

Planned Value (PV)

Planned Value

The budget allocated and approved for the scheduled work schedule of an activity or WBS component

Scheduled work progress budget

Earned Value (EV)

Earned Value

The value of work completed for a project activity or WBS component

value of work completed

Actual Cost (AC)

Actual Cost

The total costs actually incurred and recorded to complete the work of the activity or component of the WBS

actual total cost incurred

Schedule Variance

SV=EV-PV

Schedule Variance = Earned Value – Planned Value

Cost Variance

CV=EV-AC

Cost deviation = Earned value – Actual cost

Schedule Performance Index

SPI=EV/PV

Schedule Performance Index = Earned Value/Planned Value

Cost Performance Index

CPI=EV/AC

Cost performance index = earned value/actual cost

3. trend analysis

BAC

completion budget

EAC

Completion Estimate

most accurate

EAC=AC bottom-up ETC

Assume it will be completed at budgeted unit price

EAC=AC (BAC-EV)

Assuming done at current CPI

EAC=BAC/CPI

ETC

Completion needs to be estimated

4. TCPI=(BAC-EV)/(BAC-AC)

Performance index to completion = how much more needs to be done/how much money is left

Performance index to completion = (completion budget - earned value) / (completion budget - actual cost)