PMBOK 7.1 | KA 4: Cost | Plan Cost Management
What are the 3 tools and techniques in 7.1 Plan Cost Mgmt (KA 4: Cost)?
1. Expert judgment 2. Data analysis 3. Meetings
What are the 4 OPAs that can influence 7.1 Plan Cost Mgmt (KA 4: Cost)?
1. Financial controls procedures 2. Historical Info and Lessons Learned Repository 3. Financial databases 4. Policies, procedures and guidelines on cost estimating / budget
What is the Cost Management Plan? (The 1 output of 7.1 Plan Cost Mgmt KA 4: Cost)
- A component of the Project Mgmt Plan. - Describes how the project costs will be planned, structured and controlled - Based on project cost estimates
What is 1 Output of 7.1 Plan Cost Mgmt (KA 4: Cost)?
1. Cost Management Plan (a component of the Project Mgmt Plan)
What are the 6 EEFs that can influence 7.1 Plan Cost Mgmt (KA 4: Cost)?
1. Org culture and structure 2. Market conditions (determines what products / services / results in regional and global markets) 3. Currency exchange rates 4. Published commercial information (e.g. resource cost info on labour and materials) 5. Project Mgmt Info Systems 6. Productivity differences in different parts of the world
What are the 4 inputs in 7.1 Plan Cost Mgmt?
1. Project Charter 2. Project Mgmg Plan - Schedule Mgmt Plan - Risk Mgmt Plan 3. EEFs 4. OPAs
What is the role of the PM in 7.1 Plan Cost Mgmt (KA 4: Cost)?
1. To manage the budget by reviewing earned value (EV) results. i.e. Earned Value Management (EVM)
How many inputs, Tools and techniques, and Outputs in 7.1 Plan Cost Management (KA 4: Cost)?
4, 3, 1
In which process group does 7.1 Plan Cost Mgmt occur?
II Planning
What is the key benefit of 7.1 Plan Cost Management (KA 4: Cost)?
It provides guidance and direction for how project costs will be managed.
What is Earned Value Management?
Technique that combines measures of scope, schedule, and cost for evaluating project progress. Earned Value Analysis can FORECAST (i.e. predict) and enables Projects Mgrs to adjust/take action accordingly. Relies on a key measure known as 'earned value.'
What are the 8 things the Cost Mgmt Plan can establish? (a component of the Project Mgmt Plan., Cost Mgmt Plan is the 1 output of 7.1 Plan Cost Mgmt KA 4: Cost)
The Cost Mgmt Plan can establish 1. Units of measures - Time: staff hours / days / weeks - Quantities: metres, litres, cubic yards - Currency, lump sum 2. Level of precision: What do you round up/down to? 3. Level of accuracy: The acceptable range e.g. +/- 10%) for realistic cost estimates. May include amount for contingencies 4. Organisational procedures links: There are control accounts for each WBS component, which is assigned a unique code / account number, and links to the org's accounting system 5. Control thresholds: The agreed amount of variance from cost before actions needs to be taken. Usually as a % of deviation from baseline. 6. Rules of performance management: Earned Value Mgmt (EVM) rules of performance measurement are set. e.g. - Set out when in the WBS that the control accounts will be performance measured - Establish EVM techniques (weighted milestones, fixed-formula, percent complete) - Specify tracking methodologies / EVM computation equations to calculate projected Estimate at Completion (EAC) forecasts to provide a validity check on the bottom-up EAC 7. Reporting formats (and frequency) 8. Additional details - Description of strategic funding choices - Procedures to manage currency exchange fluctuation - Procedures for recording project cost
What processes may be included in the Cost Mgmt Plan? (the 1 output of 7.1 Plan Cost Mgmt KA 4: Cost)
The Cost Mgmt Plan may include processes for 1. Estimating cost 2. Developing a time-phased budget 3. Monitoring and controlling costs 4. Specifying the level of authority for cost (ie financial delegations) 5. Funding limitations (how much they can borrow/who they can borrow from I assume) 6. How to record costs
Define 7.1 Plan Cost Management (KA 4: Cost)
The process of defining how costs will be estimated, budgeted, managed, monitored and controlled