A Guide to Project Management

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Unformatted text preview: ion 5.3.3.1) identifies the project elements to which costs will be allocated. A Guide to the Project Management Body of Knowledge (PMBOK Guide) 2000 Edition 2000 Project Management Institute, Four Campus Boulevard, Newtown Square, PA 19073-3299 USA NAVIGATION LINKS ACROYMNS LIST ACRONYMS LIST 89 ACROYMNS LIST Chapter 7--Project Cost Management Figure 72 | 7.4.2.2 Expected Cash Flow Cumulative Values Cost Baseline Time Figure 72. Illustrative Cost Baseline Display ment ment geE L geE PL .3 Project schedule. The project schedule (described in Section 6.4.3.1) includes planned start and expected finish dates for the project components to which costs will be allocated. This information is needed to assign costs to the time period when the cost will be incurred. .4 Risk management plan. The risk management plan is discussed in Section 11.1.3. In addition to this, the risk management plan often includes cost contingency, which can be determined on the basis of the expected accuracy of the estimate. P 7.3.2 Tools and Techniques for Cost Budgeting .1 Cost budgeting tools and techniques. The tools and techniques described in Section 7.2.2 for developing project cost estimates are used to develop budgets for activities or work packages as well. 7.3.3 Outputs from Cost Budgeting .1 Cost baseline. The cost baseline is a time-phased budget that will be used to measure and monitor cost performance on the project. It is developed by summing estimated costs by period and is usually displayed in the form of an S-curve, as illustrated in Figure 7-2. Many projects, especially larger ones, may have multiple cost baselines to measure different aspects of cost performance. For example, a spending plan or cash-flow forecast is a cost baseline for measuring disbursements. 7.4 COST CONTROL Cost control is concerned with a) influencing the factors that create changes to the cost baseline to ensure that changes are agreed upon, b) determining that the cost baseline has changed, and c) managing the actual changes when and as they occur. Cost control includes: 90 NAVIGATION LINKS ACROYMNS LIST ACRONYMS LIST ACROYMNS LIST A Guide to the Project Management Body of Knowledge (PMBOK Guide) 2000 Edition 2000 Project Management Institute, Four Campus Boulevard, Newtown Square, PA 19073-3299 USA Chapter 7--Project Cost Management Monitoring cost performance to detect and understand variances from plan. Ensuring that all appropriate changes are recorded accurately in the cost baseline. Preventing incorrect, inappropriate, or unauthorized changes from being included in the cost baseline. Informing appropriate stakeholders of authorized changes. Acting to bring expected costs within acceptable limits. Cost control includes searching out the "whys" of both positive and negative variances. It must be thoroughly integrated with the other control processes (scope change control, schedule control, quality control, and others, as discussed in Section 4.3). For example, inappropriate r...
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This document was uploaded on 09/27/2013.

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