Project Management
4. Project Cost Management
Includes the process is estimating, budgeting, financing, managing, and controlling cost so that a project can be completed within the approved budget.
i. Plan Cost
a. Inputs
i. Project Charter
ii. Project Management Plan
iii. Project Documents from above
iv. Enterprise Environmental Factors
v. Organizational Assets
b. Tools
i. Expert Judgement
ii. Data Analysis
iii. Meetings
c. Output
i. Cost Management Plan
ii. Estimate Cost
a. Inputs
i. Project Charter
ii. Project Management Plan
iii. Project Documents from above
iv. Enterprise Environmental Factors
v. Organizational Assets
b. Tools
i. Expert Judgement
ii. Parametric Estimating
iii. Three-point Estimating
iv. Project Management Info
v. Analogous Estimating
vi. Bottom-up Estimating
vii. Data Analysis
viii. Decision Making
c. Output
i. Cost Estimate
ii. Basis of Estimate
a. How
b. Assumptions
c. Risk
d. Constraints
iii. Project Documents Updates
iii. Determine Budget
a. Input
i. Project Charter
ii. Project Management Plan
iii. Project Documents from
a. Activity of Cost
b. Project Schedule
iv. Business Documents
v. Agreements
vi. Enterprise Environmental Factors
vii. Organizational Assets
b. Tools
i. Expert Judgment
ii. Cost
iii. Aggregations
iv. Data Analysis
v. Historical information review
vi. Funding limit
vii. Financing
c. Output
i. Cost Baseline
ii. Project Funding requirements
iii. Cost Estimate
iv. Risk schedule
v. Project Updates
iv. Control Cost
a. Input
i. Project Charter
ii. Project Management Plan
iii. Project Documents from above
iv. Enterprise Environmental Factors
v. Organizational Assets
b. Tools
i. Expert Judgement
ii. Data Analysis
iii. To-Complete Performance
iv. Project Management Information System
c. Output
i. Work Performance
ii. Cost Forecast
iii. Change Request
iv. Project Document Updates
Earned Value Management
Earned Value vs Planned Value
Earned Value (EV) is the budget allocated to each of the activities that have been completed at that point in time.
Planned Value (PV) is the total of all work packages planned for project = Project Budget
Earned Value (EV) is compared to Planned Value (PV) to determine if the project is on track.
Acronym Term Explanation
PV Planned Value Authorized budget assigned to scheduled work
EV Earned Value Worked performed in terms of budget authorized for work
AC Actual Cost Actual cost incurred in work performed
BAC Budget at Completion Budgeted amount for the total work
EAC Estimate at Completion Estimated total cost of project
ETC Estimate to Complete Expected cost to finish all remaining project work
VAC Variance at Completion Projected budget surplus or deficit at end of project.
Term Formula Interpretation
Cost Variance (CV) EV- AC Negative is over budget: positive is under budget
Schedule Variance (SV) EV – PV Negative is behind schedule; positive is ahead of schedule
Cost Performance Index (CPI) EV/AC Worth of work gotten of every dollar
Schedule Performance Index (SPI) EV/PV Percentage progress made against plan rate
Calculations
Estimate at Completing (EAC) BAC/CPI Work performed at current CPI
AC + [(BAC-EV)/(CPI*SPI)] Factorizing in both CPI and SPI
Estimate to Completion (ETC) EAC – AC Amount of cost from current to end
Variance at Completion (VAC) BAC – EAC Over budget or under budget
To Complete Performance Index (TCPI)
· (BAC – EV) / (BAC – AC) for managing to budget
· (BAC – EV) / (EAC – AC) to manage to a specified value
