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MindMap Gallery PMP-07 Project Cost Management

PMP-07 Project Cost Management

Chapter 7 Project Cost Management, PMP project management, PMBOK sixth edition knowledge structure organization, (PMBOK 6th Edition) Essential for studying and preparing for exams, 49 process tests, The ten knowledge areas of PMP, the input and output of the five process groups, PMP Exam—Knowledge Points Review (PMBOK Sixth Edition).

Edited at 2019-08-26 09:17:08

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PMP-07 Project Cost Management

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Outline

07 items cost management

Excessive fund balance is a waste of opportunity cost

as per approved budget

by work package

plan according to schedule

Product life cycle cost = project implementation cost, product operating cost, scrap processing cost

Use financial indicators to select projects

payback period

The project construction period plus the cumulative operating profit after the project is put into production, the time required to reach the investment amount

ROI

It refers to the ratio of the average annual operating profit after the project is put into production to the project investment amount. It is necessary to consider the profit during the entire operation period after the project is put into production.

net present value

Refers to the value of a future cash amount today. If the value of 100 yuan one year from now is equal to 99 yuan today, then the present value of 100 yuan is 99 yuan.

The present value of revenue minus the present value of expenditures gives the net present value. Any project with a net present value greater than 0 can be done.

When calculating the net present value, time has been taken into account, so the project duration or investment payback period usually does not need to be considered.

benefit cost ratio

The benefits of the project are divided by the costs. Only projects with a benefit-cost ratio greater than 1 are worth doing.

cost

Direct depreciation method, accelerated depreciation method

direct cost

Intra-project costs, such as personnel salaries

Sunk costs

Costs incurred in the past have nothing to do with future choices

opportunity cost

Choose one over (profit of) the other

When making decisions, opportunity costs should be considered

7.1 planning cost management

Determine how to estimate, budget, manage, monitor and control project costs

output

cost management plan

Describe how project costs will be planned, scheduled and controlled

unit of measurement, precision, accuracy

control threshold

The maximum difference allowed before some action is required, Usually expressed as a percentage deviation from the baseline plan

Report Format The format and frequency of preparation of various cost reports need to be specified

7.2 Estimate cost

The process of making an approximate estimate of the monetary resources required to complete project activities.

output

Cost Estimate

Including costs that may be required to complete the project work and contingency reserves to deal with identified risks, and a quantitative estimate of management reserves to deal with unplanned work

Estimate basis

The amount and type of supporting information required for the cost estimate, and a clear and complete description of how the cost estimate was arrived at

Tools & Techniques

analogy estimation

Use historical data from similar projects, fast

parameter estimation

Use statistical relationships and variable data, such as hours worked and hourly rates

Bottom-up estimation

most accurate

three point estimate

data analysis

Alternatives Analysis

Reserve analysis

quality cost

consistency cost The cost of preventing failure

prevention cost

Evaluation cost

non-conformity cost Processing failure fee

internal failure costs

external failure costs

7.3 Budgeting

Purpose: Develop project cost baselines, and for large projects financing will be used to obtain funding for the project

enter

business documents

financial factors

project files

Project schedule

output

Project funding requirements

Determine total funding requirements and periodic (e.g. quarterly or annual) funding requirements based on cost baseline

cost basis

including contingency reserves, Excludes management reserves

contingency reserve

The project manager has control and can use it to reduce cancellations. cannot be added

management reserve

It can only be used with approval from senior management.

Approved project budget allocated by time period, used as a basis for comparison to actual results

Tools & Techniques

cost summary

Historical information review

Financing

Funding Limit Balance

7.4 Control costs

Purpose: Analyze whether the expenditure of funds matches the work completed

enter

job performance data

Project funding requirements

output

job performance information

Assess implemented deviations against cost baseline

cost forecast

be documented and communicated to relevant parties

change request

After analyzing project performance, change requests may be made to the cost baseline and schedule baseline

Tools & Techniques

Performance index to completion

Earned value management

performance measurement benchmarks

When the scope is determined, seek the comprehensive optimization of cost and schedule

Earned Value Metric

Planned value (PV) = planned workload x planned unit price (progress)planned value

Earned value (EV) = actual workload x planned unit price earned value

Actual cost (AC) = actual workload X actual unit price actual cost

cost performance index (CPI) = Earned Value (EV) / Actual Cost (AC)

Greater than 1, indicating cost savings

Planned unit price/actual unit price

schedule performance index (SPI) = Earned Value (EV) / Planned Value (PV)

Greater than 1, indicating progress is ahead of schedule

actual workload/planned workload

Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)

Greater than 0, indicating cost savings

Schedule Variance (SV) = Earned Value (EV) / Planned Value (PV)

Greater than 0 means progress is ahead of schedule

budget at completion BAC

Cost baseline, estimated from the beginning

Estimate at Completion EAC

Estimates of the cost to complete the project at various points during execution

Variance at completion = Budget (BAC) - Estimate (EAC)

If it is greater than 0, it means it is within the budget.