Determine budget determine budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. Control costs is achieved with reference to the cost. It is a fixed reference point to measure and compare your projects progress against. It includes activities and tools to help you complete your project within the approved budget. Each of the triple constraints time, cost, scope have a baseline, which is established as part of the overall project management plan. Earned value ev has grown in popularity over the last several years. This cost estimation is usually illustrated in a scurve. Suppose we show the budgeted expenditure for an item we are purchasing. This term is defined in the 3rd, 4th and 5th edition of the pmbok. But theres little your project sponsor, your client, or their finance director care about more than your budget and how closely you can stick to it. Project cost management is one of the most important aspects of project management that you need to master. The cost baseline template is a time phased budget template that will be used to measure and monitor cost performance on the project. Time or money allocated in the schedule or cost baseline for known risks with active response strategies.
All the minor budgets are added together to create the overall cost performance baseline, which is displayed as a graph of cumulative funds to be spent over. Get access to 16,000 woodworking plans, download 50 free plans. It feels complicated and has the mystical air of mathematical magic and wizardry. All the minor budgets are added together to create the overall cost performance baseline, which is displayed as a graph of cumulative funds to be spent over time. In regards to money and remaining in business, providing a budget that is adjusted to time is considered a cost baseline. Project cost management for project managers based on pmbok by dr. Pmbok guide sixth ed pdf is available for download free of cost for pmi members. This allows you to assess the performance of your project over time. See also cost baseline, performance measurement baseline, schedule baseline, and scope baseline. This cost baseline is created by estimating the costs by the particular period that the project would be completed. For more information, see performance measurement baseline.
A measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstading work to the budget available. Study flashcards on pmbok chapter 7 project cost management at. What is a baseline in project management project baseline. Any changes to the cost baseline must be approved by the change control board. It is a technique that requires the formation of an integrated baseline to measure performance of the. Pmbok chapter 7 project cost management flashcards. It includes activity costs plus contingency reserves, work package costs plus contingency reserves, and management. Earned value wbs to performance measurement baseline. Some examples of this are cost baseline, performance measurement baseline, and technical baseline. This paper develops a 3d project integration model for pmbok comprising core constraints of. Project management body of knowledge 2000 edition caricom.
Pmbok standards ncampo 20 conference winstonsalem, nc may 15 17, 20 majed al ghandour, ph. Determine budget overview determine budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. Overview of project management knowledge areas and project management processes 8 figure 12. The project cost management processes are focused on the cost of the project resources used.
The process of monitoring the status of the project to update project costs and managing changes to he cost baseline. At the beginning of the pmp exam, use your scratch paper to download all of. The term baseline in project management is typically used with a modifier of some sorts. See also cost baseline, performance measurement baseline, schedule baseline, and. The value of total planned work, the project cost baseline. In the earned value management evm technique, the cost performance baseline is known as performance measurement baseline pmb. The cost baseline is developed during which process. A guide to the project management body of knowledge pmbok. Since this is the basis for our performance measurement system, we must be careful that the budget is shown on the cost baseline at the same point in time where we expect the actual cost to occur. Cost baseline is the authorized timephased spending plan for the project on which the project cost performance is to be measured against. Development of generic key performance indicators for pmbok. The above estimated costs established during the planning phase might not be estimated. See also cost baseline, performance measurement baseline. It is developed in the pmboks determine budget process which adds up the estimated costs of the project activities in order to create the budget.
A guide to the project management body of knowledge. The cost baseline tells you how much you should have spent at any given point in time. Pmp pmbok 5th edition chapter7 project cost management 27,217 views. Project cost management makes a clear distinction between. This course was designed as a supplemental study guide for the major content areas of chapter 8 of a guide to the project management body of knowledge pmbok guide, fourth edition. A baseline in project management is a clearly defined starting point for your project plan. Reprinted from a guide to the project management body of knowledge pmbok guide, 5th edition by project management institute, 20, p. Creating budget or cost baseline for projects rationalplan. The approved version of a work product that can be changed using formal change control procedures and is used as the basis for comparison to actual results.
But many factors can affect the cost performance of a project. Connoisseur solutions determine budget outputs cost performance baseline is an authorized. Monitoring cost performance and understanding the root causes of. This is used as a example in which cost performance is measured and monitored to gauge the importance of said project. To manage your project costs effectively, there are three key processes you need to be able to perform. Now these three baselines put together is known as the performance measurement baseline. Schedule performance index spi and cost performance index cpi are earned value management. It provides details on how to plan, manage and control the project cost in relation to the cost baseline and manage the cost variances. The triple constraints time, cost and scope each have a baseline which is a part of the project management plan.
It helps to identify deviation to the project planned costs and possible corrective action to minimize threats or capitalize on opportunities. The pmbok guide specifies the use of project baselines. Variance analyses can be performed by comparing planned activity cost against actual activity cost to identify variances between the cost baseline and actual project performance. Ultimately, project management includes a variety of responsibilities within ones team in order to achieve maximum results for their employer. T d jainendrakumar the cost management includes the processes involved in estimating, budgeting, and controlling costs so that the project can be completed within the approved budget. Posted on april 29, 20 by jerome rowley after chapter 6, which discusses time management, the next knowledge area in chapter 7 covers the last of the three major triple constraints, that of cost, and the purpose of this knowledge area is so that the project can be. Project cost management pmbok 5th edition slideshare. The control costs process monitors project progression and update costs while managing changes to the project cost baseline. If you are managing changes to the projects cost baseline, which process are you. Pmp pmbok 5th edition chapter7 project cost management. As the cost baseline is baselined and managed under configuration management, changes to the cost baseline must undergo proper change management processes. A timephased plan for when funds will be disbursed on a project, baseline against which measuring project cost performance. The cost performance baseline, also called the performance measurement baseline pmb, is one of the project baselines that are incorporated into the project management plan.
This is done during the planning process, and records what the project had planned, scheduled, budgeted for, in terms of the schedule, scope and cost. According to pmbok the cost baseline is a timephased budget that is used as a basis against which to measure, monitor, and control overall cost performance on the project. Project cost management project cost management includes the processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget. The project management body of knowledge includes proven traditional practices that are widely applied as well as innovative practices that are emerging in the profession. This project management plan template is a good starting point for planning your project. Watch the complete video to see what is included in this process to create a cost baseline against which project performance can be monitored and. A successful project requires a detailed and wellplanned project management plan. The focus of this process is to recognize deviations to the project planned expenditures or budget baseline as soon as practicable so. These baselines refer to the key points of the project which include schedule, cost, and scope. Project cost management pmp certification training. Pmbok 6th edition pdf download for pmp certification. Cost baseline is the authorized timephased spending plan for the project on which the project cost performance is to be. Developed by summing up the approved budgets by time period and is typically displayed in the form of an scurve.
Monitoring and controlling process group cost mgmt knowledge area. There are three different baselines that are commonly addressed in most, if not all, project management practices. The cost performance baseline is an authorized timephased budgetatcompletion bac used to measure, monitor, and control overall cost performance on the project pmis fourth edition pmbok. Poor project cost management is one of the easiest ways to make a project go awry. Project cost management the essential things to know and do. The key benefit of this process is that it determines the cost baseline against which project performance can be monitored and controlled. Hence, good project management requires a firm grasp on the concepts and techniques in project budgeting and cost control thankfully, the project management body of knowledge pmbok gives us a strong foundation in this area project cost management is the fourth of 10 project management knowledge areas. In this course, you will learn how the project management team ensures that a project is completed at the level of quality required by all the stakeholders. Ofcourse all of this is done during the planning phase. A set of navigation buttons is provided on the first page of the pmbok guide. It should contain everything that the customer needs, as. Project cost management for project managers based on.
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