Cost Management – The Basics

cost management

As they say, “Its all about the money, honey.”

If you look at it, all projects boil down to money. If only you had a bigger budget, you could get more people on the job, you could deliver early, you could deliver so much more. Budget as you may have guessed is where all the fun lies!

And coming up with a budget is one of the most important tasks of the Cost Management Knowledge Area. Let’s look at all the processes of cost management,

cost management

Plan Cost Management

This is where you plan all the processes and methodologies you would use for cost management on your project. The subsidiary Cost Management Plan is the key output of this process

Estimate Costs

This is the process where you figure out how much the project would cost. To do so, you would estimate cost for each activity of the project. Note that you need to have a good idea of the work you’re going to do and the time it would take to successfully estimate the activity’s cost

Determine Budget

Remember Scope Baseline or Schedule Baseline? This is the process where you determine the Cost Baseline. All the activity estimates are added up to come up with the Cost Baseline. All the future expenditures, as your project progresses, are then compared to this baseline

Control Costs

Just like the other usual Monitoring and Controlling processes, this is where you track the actual work and compare it against the baseline to determine if any adjustments are needed. Basically comparing how you are doing versus how you thought you would do

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