Chapter 6: Project cost management. This chapter describes important concepts in project cost management, particularly planning cost management, creating good estimates, and using earned value management (EVM) to assist in cost control. | Chapter 6: Project Cost Management adopted from PMI’s PMBOK 2000 and Textbook : Information Technology Project Management (author : Dr. Kathy Schwalbe) Contents Importance of Project Cost Management Problem: cost overrun and cannot meet cost goals Costs are measured in monetary units Project Cost Management Resource planning, Cost estimating, Cost budgeting, Cost control Resource Planning consideration difficulty, uniqueness, track record, people, equipment and materials Types of cost estimate basic tools and techniques Earned value management is an important tool for cost control The Importance of Project Cost Management IT projects have a poor track record for meeting cost goals Average cost overrun from 1995 CHAOS study was 189% of the original estimates; improved to 45% in the 2001 study In 1995, cancelled IT projects cost the . over $81 billion Chapter 6 Typical allocation of cost What is Cost and Project Cost Management? Cost is a resource sacrificed or fore-gone to achieve a specific objective or something given up in exchange Costs are usually measured in monetary units like dollars This is the process group to ensure the project is completed within the approved budget. The major output is the cost management plan There are 4 processes in Project Cost Management Chapter 6 Project Cost Management Processes Resource planning (planning phase) determining what resources and quantities of them should be used Cost estimating (planning phase) developing an estimate of the costs and resources needed to complete a project Cost budgeting (planning phase) allocating the overall cost estimate to individual work items to establish a baseline for measuring performance Cost control (control phase) controlling changes to the project budget Chapter 6 Basic Principles of Cost Management Most CEOs and boards know a lot more about finance than IT, IT project managers must speak their language Profits are revenues minus expenses Life cycle costing is . | Chapter 6: Project Cost Management adopted from PMI’s PMBOK 2000 and Textbook : Information Technology Project Management (author : Dr. Kathy Schwalbe) Contents Importance of Project Cost Management Problem: cost overrun and cannot meet cost goals Costs are measured in monetary units Project Cost Management Resource planning, Cost estimating, Cost budgeting, Cost control Resource Planning consideration difficulty, uniqueness, track record, people, equipment and materials Types of cost estimate basic tools and techniques Earned value management is an important tool for cost control The Importance of Project Cost Management IT projects have a poor track record for meeting cost goals Average cost overrun from 1995 CHAOS study was 189% of the original estimates; improved to 45% in the 2001 study In 1995, cancelled IT projects cost the . over $81 billion Chapter 6 Typical allocation of cost What is Cost and Project Cost Management? Cost is a resource sacrificed or fore-gone
