A guide to the project management body of knowledge pmbok guide 2000 edition 2000 project management institute, four campus boulevard, newtown square, pa 190733299 usa vii list of figures figure 11. Project management plan components include but are not limited to. It will provide the planning and structure necessary to control the costs of the project, keeping them within the limits of your budget. Design and development of a schedule management plan smp. You can check out the complete range of project management pdf ebooks free from this website. Pmp pmbok 5th edition chapter7 project cost management. In simple words, a cost management plan is the outline of the projects estimation, allocation and control of costs for the required resources to complete all project activities. Project cost management 1 plan cost mgmt 2 estimate cost 3 determine budget 4.
The cost management plan for project name documents the methods to be used to manage and control the many internal and external cost components. Pmbok is a registered mark of project management institute, inc. Essentially what this does is give a framework for of the other processes in the cost management knowledge area, and the next post will discuss the detailed contents of the cost management plan. The budget should take into account all stages of the project life cycle. Pmbok chapter 7 project cost management flashcards. Poor project cost management is one of the easiest ways to make a project go awry. Overview of project management knowledge areas and project management processes 8 figure 12. This helps in completing the project within the approved budget. That is why, the cost management has been based on four plans include the resource, cost estimation, budget planning and cost control. T d jainendrakumar the cost management includes the processes involved in estimating, budgeting, and controlling costs so that the project can be completed within the approved budget. Work performance information which comes from direct and manage project execution, and provides deliverable status, actual costs and estimates for cmpleted work 4.
Qi anbang 2000 published a book total cost management of project, this book gives a brief introduction on the life cycle cost management theory and methods, this is the earliest writings. This document describes how the project costs will be planned, structured, and controlled. The pmbok guide5th editiondescribes the following 4 processes as necessary for planning, quantifying and measuring costs, so that the project can be completed within the approved budget. Once developed, this cost management plan should be. The work breakdown structure wbs is the basis for the cost management plan because the costs are totaled or rolled up from the costs for the individual work packages in the wbs. Project managementpmbokcost management wikibooks, open. Plan cost management, estimate costs, determine budget, and control costs. Identifies who has the authority to approve changes to the project or its budget. The key benefit of this selection from a guide to the project management body of knowledge pmbok guide, fifth edition book.
In this pmp study guide, well cover all the processes in the cost management knowledge area in pmbok 6th edition. A guide to the project management body of knowledge. The reference in the pmbok guide to the schedule management plan includes only a brief comment about the planning effort noting, this planning effort is part of the develop project management plan process section 4. Please refer to pmbok guide fourth edition, page 167, figure 71.
Project cost management is the fourth of 10 project management knowledge areas within the pmbok. This article outlines the processes involved in managing project cost, processes that. This part of the cost management plan describes the procedure for measuring the project cost. Enterprise environmental factors organizational process assets. Project cost management includes the processes involved in planning. It is important that all of the expenses will be recorded and monitored to ensure that they will meet the cost management plan. The plan cost management process is performed after the scope and schedule activities of the project scope management and project time management knowledge areas. Project cost management 1 plan cost mgmt 2 estimate cost 3 determine budget 4 control costs 2. Project cost management for project managers based on pmbok by dr. This section of the project management plan provides an overview of the purpose, scope and objectives of the project for which the plan has been written, the project assumptions and constraints, a list of project deliverables, a summary of the project schedule and budget, and the plan for evolving the project management plan.
Cost management should occur early in project planning in order to establish a framework for all cost management processes and ensure that the project does not go over budget. For example, it helps to know the scope of a project before you plan the schedule. Project cost management includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that projects can be completed within budget 1. The cost management plan clearly defines how the costs on a project will be managed throughout the projects lifecycle. Refer to the project master project plan to obtain the projects wbs and refer to the project schedule management plan for a description of how the wbs was established. The cost management plan includes a description of how costs will be estimated, budgeted, and controlled. Project funding requirements from determine budget 3. Thorough planning of the project and subsequent work. Created during the project planning phase, the cost management plan is a document that defines how you manage, control, and communicate a projects costs in order to complete the project on budget. Project management plan, which contains the cost management plan and the cost performance baseline 2.
If the earned value is equal to actual cost, it means. Estimate costs determine budget control costs processes and related tools and techniques are usually selected when defining the project life cycle and are documented in cost management plan. For this reason a major part of any project is the cost management plan. This term is defined in the 3rd and the 4th edition of the pmbok. Apr 25, 2017 the cost management plan guides these four processes. Pdf cost management of projects using a standard pmbok in. Metrics and variance analysis must be applied to these cost components throughout the project lifecycle for tracking, reestimating and adjusting the project budget if needed. This could be hours, euros, yen, dollars, or some other metric. The first of the processes within the knowledge area is called plan cost management.
This knowledge area in pmbok pdf involves planning, estimating, budgeting, financing, funding, managing and controlling costs. Project cost management the process involved in estimating, budgeting, and controlling cost so that the project can be completed within approved budget life cycle costing looking at the cost of whole life of the product include maintenance value analysis value engineering looking at less costly way to do the same. Project cost management pmbok sixth edition proventures blog. Project cost management a guide to the project management. This project uses the proven methodology of cost and schedule management also known as earned value to measure the progress of the plan versus the initial estimates. Its aim is described in pmp courses as to define the necessary budget to execute the project and its aim is to monitor and control the project costs to match the approved budget.
A guide to the project management body of knowledge pmbok. This term is defined in the 5th edition of the pmbok. The fundamental basis of the cost management plan is the wbs work breakdown structure where costs for each work package can be amalgamated so cost estimates can be calculated and included in the plan. Get a guide to the project management body of knowledge pmbok guide, fifth edition now with oreilly online learning. Hence, good project management requires a firm grasp on the concepts and techniques in project budgeting and cost control thankfully, the project management body of knowledge pmbok gives us a strong foundation in this area project cost management is the fourth of 10 project management knowledge areas. It sets the format and standards by which the project costs are measured, reported and controlled. To assist users of this document who may be familiar with its predecessor, we have summarized the major differences here. A summary of pmbok practices cost management brighthub. It is recommended that project managers should be conversant in this methodology by undertaking formal training in this discipline.
The projects cost plan configuration is one of the most essential parts of a projects planning phase, and effectively serves as a safety net that guarantees that. Project cost management for project managers based on pmbok. Earned value management is a useful tool that is used globally for the measurement and control of the costs in a project. Pdf cost control is the part of project management such that cost management processes involved in planning, estimating, budgeting, and. Free cost management plan templates project management docs. Materials in this class are based on the a guide to the project management body of knowledge, pmbok guide sixth edition, project management institute inc. Sample cost management plan innovative project guide. The majority of these processes occur in the planning stage. Cost estimation and control is vital to a projects success. It is irrespective of project size whether it is small or big, how many resources and activities are in it, the process of. Pmp certification study notes 7 project cost management.
This is discussed as a cost management plan assembled by the cm early in the predesign phase which includes all cost components of the project e. This section of the project management plan provides an overview of the purpose, scope and objectives of the project for which the plan has been written, the project assumptions and constraints, a list of project deliverables, a summary of the project. Apr 27, 2020 6 items to include in cost management plan 5 min. Cost management is one of the 10 project management knowledge areas and it involves necessary processes to finish the project within the approved budget. The second process involved with pmbok cost management strategies is cost budgeting. Project cost management the pmbok project cost management processes as previously stated, money is usually one of the key constraints of any project and this process is therefore all about defining the budget and managing the actual project costs within it. Thankfully, the project management body of knowledge pmbok gives us a strong foundation in this area project cost management is the fourth of 10 project management knowledge areas within. The pmbok controlling processes cost control have been expanded into four sections called cost tracking, cost reporting and metrics, cost control and changes, and cost closeout. Moreover, inputs and tools and techniques are the very same for both plan cost management and plan schedule management.
Plan cost management process is the first process of cost. Oct 18, 2010 project cost management the process involved in estimating, budgeting, and controlling cost so that the project can be completed within approved budget life cycle costing looking at the cost of whole life of the product include maintenance value analysis value engineering looking at less costly way to do the same. Among other things, a cost management plan identifies the individual or group responsible. The project manager relies upon the data she has gathered from estimates to set up a realistic project budget. Project cost management for project managers based on. Hence, good project management requires a firm grasp on the concepts and techniques in project budgeting and cost control thankfully, the project management body of knowledge pmbok gives us a strong foundation in this area project cost management is the fourth of 10 project management. Hence, good project management requires a firm grasp on the concepts and techniques in project budgeting and cost control. The guide is a document resulting from work overseen by the project management institute pmi, which offers the capm and pmp certifications.
The cost management plan helps project managers with overseeing the projects. This will require corrective action from the project manager in order to bring the cost andor schedule performance indexes below the alert level. Apr 30, 20 the output of the process plan cost management, it will be no surprise, is the cost management plan itself. Project cost management includes the processes involved in planning, estimating, budgeting. Without the plan cost management, it will be difficult for project managers to even begin the project because there are no means to direct and control the cost. It defines the methods and techniques used throughout the project.
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