Cost management
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Cost management
- 2. What is Cost Management? 2 • Process of planning and controlling the budget of the project. • Cost management predicts the expenditure and reduce the project from going over budget.
- 3. Principles 3 • Cash Flow Analysis (Estimated project cost and benefit of project organization). • Tangible Cost (Can be measured) A task that was allocated ₹150,000 but actually costs ₹100,000 would have a tangible benefit of ₹50,000. • Intangible Cost (Monetary cost) Research related areas
- 4. Principles 4 • Direct cost (Directly related to project) Salary Purchase of software • Indirect cost (Not directly related to project) Electricity bill Telephone bill
- 5. Why is it important? 5 • Identify each of the costs within your project • Ensure that expenses are approved before purchasing • Keep a central record of all costs incurred • Control the overall cost of your project • Keep your project and financial plans up-to-date
- 6. What does it include? 6 • Budget • Benefit • Spending • Expenses • Funding • ROI
- 7. How is it done in project? 7 • Cost Management Plan • Cost Baseline • Activity Cost estimates • Performance Measurements
- 8. Cost in Project Management 8 Estimate Cost Determine Budget Control Cost
- 9. Estimating Cost 9 • Projected cost of a project. • Analogous Estimating • Parametric Estimating • Bottom-up Estimating • Three-point Estimates • Cost of quality
- 10. Determine Budget 10 • Cost Aggregation • Reserve Analysis • Historical Data • Funding Limit Reconciliation
- 11. Control Cost 11 • Earned Value Management • Forecasting • To-Complete Performance Index (TCPI) • Variance Analysis • Performance Reviews
- 12. Earned Value Analysis 12 • Planned Value – Total cost estimate planned to be spent on an activity during a given period • Earned Value – Estimate of the value of the physical work actually completed • Actual Value – Total of direct and indirect costs incurred in accomplishing work on an activity
- 13. Rate of Performance 13 • Ratio of actual work completed to the percentage of work planned to have been completed at any given time. • For example, suppose the server installation was halfway completed by the end of week 1; the rate of performance would be 50% because by the end of week 1, the planned schedule reflects that the task should be 100% complete and only 50% of that work has been completed.
- 14. Cost Budgeting 14 • Allocating the project cost estimate to individual work items over time • Provides info for project funding requirements • Estimating costs for each major project activity over time • Used to measure and monitor cost performance
- 15. What are the benefits? 15 • Meeting budget goals. • Realistic project estimates. • Earned value Management • Cost accounts • Rate of performance
- 16. What are the benefits? 16 • Project is completed within an approved budget. • Accurate cost estimates and realistic budget. • Return on investment (ROI)
- 17. How does Primavera help? 17 • Budgeting • Labor cost • Earned Value Report • Cost Variance • Total Project Costing
- 18. How does Primavera help? 18 • Cost Account • Project Expenses • Manage Currency • Budget Summary • Funding Details
- 19. How Does MSP help? 19 • Earned Value management • Planned and Actual value • Manage currency • Project expenses
- 20. Pearl river tower 20
- 21. 21 Thank You
Notes de l'éditeur
- Cost Aggregation: requires you to aggregate or combine costs from an activity level to a work package level. The final sum of the cost estimates is applied to the cost baseline.Reserve Analysis: requires you to create a buffer or reserve to protect against cost overruns. The degree of protection should be equivalent to the risk foreseen in the project. The buffer is part of the project budget, but not included in the project baseline.Historical Data: requires you to think about estimates from closed projects to determine the budget of the new project. This is very similar to analogous estimation described earlier.Funding Limit Reconciliation: requires you to adhere to the constraints imposed by the funding limit. The funding limit is based on the limited amount of cash dedicated to your project. To avoid large variations in the expenditure of project funds, you may need to revise the project schedule or the use of project resources.
- Earned Value Management: uses a set of formulas to help measure the progress of a project against the plan.Forecasting: uses the current financial situation to project future costs. The forecast is based on budgeted cost, total estimated cost, cost commitments, cost to date, and any over or under budgeted costs.TCPI:represents the level of project performance that future work needs to be implemented to meet the budget.Variance Analysis: involves analysing the difference or variance between the budgeted costs and the actual costs to indicate whether the project is on budget.Performance Reviews: used to check the health of a project. Includes an analysis of project costs, schedule, scope, quality, and team morale.