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project cost management
The main content and knowledge framework of Part 1 (Chapter 7) of the PMP Project Management Examination.
Edited at 2020-09-25 21:30:14
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project cost management
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
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- Outline
5 Project Cost Management
Introduction
cost term
direct cost
Costs that are directly attributable to project work
s
General administrative expenses account or costs shared by several projects
fixed costs
Will not increase with product production quantity
Variable costs
Varies with production or workload
Controllable costs
What the project manager can control
uncontrollable costs
The project manager has no direct control over
opportunity cost
If you choose another project and give up the income of this project, the original income that can be obtained
Sunk costs
Expenses spent. Costs that should not be considered when deciding whether to proceed with a project
Project life cycle cost
All costs incurred during the entire life cycle of the system or product, including acquisition (design, production, installation and testing, etc. or activities), operation and maintenance, and disposal of the product at the end of the life cycle.
Project financial evaluation indicators
Project priority
Project importance represents the ability to obtain resources
The higher the better
PV (present value)
Future cash discounted to present value
Money has time value
NPV (net present value)
Subtract the present value of income from the present value of expenditure, and choose a project investment with a larger net present value. NPV takes into account risk
The bigger the better
IRR (internal rate of return)
A measure of profitability, the discount rate that makes the net present value of an investment project equal to zero.
The bigger the better
PP (payback period)
After the project product is put into production, the time required to achieve the cumulative operating profit equal to the investment amount. Time required to recover costs
The shorter the better to reflect project risks
BCR (Benefit Cost Analysis)
Benefit (payback)/CostRatio The income obtained for every dollar invested
The bigger the better
ROI (profit rate on investment)
Average annual profit/project investment*100%
The bigger the better
SV
progress deviation
Best is "0
CV
cost deviation
Best is "0
Schedule Performance Index (SPI)
EV/PV
Best for "1
Cost Performance Index (CPI)
EV/PC
Best for "1
planning
planning cost management
Determine how you will estimate, budget, manage, monitor and control your project cost process
enter
project management plan
project management plan
risk management plan
project management plan
The project charter specifies pre-approved financial resources from which detailed project costs can be determined
The project approval requirements stipulated in the project charter also have an impact on project cost management
project management plan
Organizational culture structure
Description of market conditions
currency exchange
lBusiness information published
project management information system
Differences in productivity in different regions
project management plan
financial control procedures
Knowledge base of historical information and lessons learned
financial database
Existing, formal and informal policies, procedures and guidelines related to cost estimating and budgeting
tool
Expert interpretation
Similar projects in the past
Information from industries, disciplines and application areas
Cost estimates and budgets
Earned value management
data analysis
Analysis of alternatives may include a review of strategic methods of financing, such as self-financing, equity investment, borrowed investment, etc. It may also include consideration of methods of raising project resources such as make, purchase, rent or lease.
Meeting
The project team holds planning meetings to develop a cost management plan
output
cost management plan
Define how project costs will be planned, estimated, budgeted and controlled
unit of measurement
precise
Set how much to round cost estimates up or down
Certainty estimate: -5% ~ +10%
Rough magnitude estimate: -25% ~ 75%
Accuracy
Specify an acceptable range for cost estimates including contingency reserves ±10%
Organizer connection
How to unify the caliber with finance
control threshold
Deviation 5%
Performance Measurement Planning
Weight distribution at each stage
Report format and frequency of preparation
Provide monthly project cost analysis reports
Other details
Explanation of exchange rate fluctuations
Strategic Financing Instructions
Estimate cost
The process of making an approximate estimate of the monetary resources required to complete project activities.
Resource quantity X resource unit price X occupied time Risk reserve Quality cost
All resources spent on the project, including labor, materials, equipment, services, facilities, special costs such as inflation, subsidies, emergency costs, etc.
enter
project management plan
Cost management plan: estimation method, precision, accuracy
Quality management plan: resources required by quality objectives
Scope Baseline: Constraints and Assumptions
project files
Lessons Learned Register
Project schedule
Resource requirements
risk register
business environment factors
market conditions
Published business information
Exchange rates and inflation rates
organizational process assets
cost estimating policy
cost estimate template
Knowledge base of historical information and lessons learned
tool
expert judgment
Similar projects in the past
Information from industries, disciplines and application areas
Cost Estimation Methods
analogy estimation
Estimating similar parameters or indicators based on similar projects
parameter estimation
Use mathematical relationships between historical data and other variables to estimate
top-down estimation
Estimate the work components and obtain their estimated sum
three point estimate
Consider uncertainty and risk in estimates to improve accuracy
data analysis
Alternative analysis
Reserve analysis
contingency reserve
Known and unknown risk events: For known and uncertain risks, the impact of unknown risks after they occur
Part of the project cost baseline
The project manager has direct control over
Cost Estimate
management reserve
Unknown unknown risk events: For unknown and uncertain risks, the consequences of the risk are unknown. such as scope and cost changes
It can be included in the project budget, but not in the project cost performance measurement baseline, that is, the project manager is not responsible for unknown and uncertain risks.
Requires management approval for use
cost budget
quality cost
project management information system
Project management information systems can include electronic forms, simulation software, and statistical analysis tools to assist in cost estimating
decision making
Voting is the process of evaluating multiple future action plans in order to achieve a certain desired result. These techniques can engage team members, improve the accuracy of estimates, and increase accountability for estimate results
output
Cost Estimate
Completing project work may require a quantitative estimate of costs
Cover all resources used by the activity
Special costs such as inflation or cost contingency reserves
Indirect costs calculated at activity level or higher
Estimate basis
Provide a clear and complete explanation of how the cost estimate was arrived at
Project file update
Hypothetical log
Lessons Learned Register
risk register
Budgeting
The process of summarizing the estimated costs of all individual activities or work packages to establish an approved cost baseline
The project budget includes all funds approved to execute the project, while the cost baseline is the approved project budget allocated by time period, including contingency reserves, but does not include management reserves
Project budget components
First, summarize the cost estimates of each project activity and their contingency reserves to obtain the costs of the relevant work packages. The cost estimates of each work package and their contingency reserves are then summarized to obtain the cost of the control account. Then summarize the costs of each control account to obtain the cost baseline.
enter
project management plan
cost management plan
resource management plan
Scope Baseline
project files
Estimate basis
Cost Estimate
Project schedule
risk register
business documents
business case
Benefit Management Plan
protocol
When developing a budget, consider the cost of products, services or results to be or have been procured, as well as applicable agreement information
business environment factors
exchange rate. Understand exchange rate fluctuations and incorporate them into the budgeting process
organizational process assets
Existing formal and informal policies, procedures and guidelines related to cost budgeting
Knowledge base of historical information and lessons learned
cost budgeting tool
Reporting Methods
tool
cost summary
data analysis
Reserve analysis. Calculate contingency reserves and management reserves. Management reserves are not part of the project cost baseline.
expert judgment
Similar projects in the past
Information from industries, disciplines and application areas
financial principles
Funding needs and sources
Historical information review
Historically accurate information used to build the model
Parameters in the model are easy to quantify
Models can be adapted to suit large projects, small projects and various project phases
Funding limit balance
Funding expenditures should be balanced against any restrictions on project funding. Balance funding levels by adjusting schedules. Funding balancing can also be achieved by adding mandatory dates to the schedule
Financing
Refers to obtaining funding for the project. Long-term infrastructure, industrial and public services projects often seek external financing. If a project uses external funding, the funding entity may impose certain requirements that must be met
output
cost basis
Is an approved version, does not contain any management reserves, can only be changed through formal change control procedures, and serves as a basis for comparison of actual results
Project funding requirements
Based on the cost baseline, determine the total funding requirements and stepped funding requirements. Presenting a ladder shape
Project file update
risk register
Cost Estimate
Project schedule
monitor
Control costs
Monitor project status to update project costs and manage the process of cost baseline changes
Project cost control
Influence factors that cause cost baseline changes
Ensure all change requests are processed promptly
Manage changes as they actually occur
Ensure cost expenditures do not exceed approved funding limits
Monitor cost performance and identify and analyze deviations from cost baselines
Monitor work performance against capital expenditures
Prevent unapproved changes in cost or fund usage reports
Report all approved changes and associated costs to relevant parties
Try to keep expected cost excesses within an acceptable range
enter
project management plan
cost management plan
cost basis
performance measurement benchmarks
project files
Lessons learned register. Lessons learned early in the project can be applied to later stages to improve cost control
Project funding requirements
Project funding requirements include estimated expenditures and estimated debt
job performance data
Work performance data contains data about project status, such as which costs have been approved, incurred, paid, and invoiced
organizational process assets
Existing formal and informal policies, procedures and guidelines related to cost control
Cost control tools
Available monitoring and reporting methods
tool
expert judgment
Deviation analysis
Earned value analysis
predict
financial analysis
data analysis
Earned Value Analysis (EMA)
Deviation analysis
trend analysis
Reserve analysis
Remaining performance index for completion
TCPI refers to the cost performance indicator (predicted value) that must be achieved by remaining work implementation in order to achieve specific management goals.
Project Management Information System (PMIS)
Commonly used to monitor the three EVM indicators of PV, EV and AC, draw trend charts, and predict the possible range of final project results.
output
Work performance information
Record the CV, SV, CPI, SPI, TCPI and VA C values of each component of the WBS and communicate to relevant stakeholders
cost forecast
Log EAC
Communicate to relevant parties
change request
Change requests may be made to the cost performance baseline or other components of the project management plan
Project Management Plan Update
cost management plan
cost basis
performance measurement benchmarks
Project file update
Hypothetical log
Estimate basis
Cost Estimate
Lessons Learned Register
risk register