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Unformatted text preview: re generally expressed in units of currency (dollars, euros, yen, etc.) to facilitate comparisons both within and across projects. In some cases, the estimator may use units of measure to estimate cost, such as staff hours or staff days, along with their cost estimates to facilitate appropriate management control. Cost estimating generally includes considering appropriate risk response planning, such as contingency plans. 88 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 Cost estimates may benefit from being refined during the course of the project to reflect the additional detail available. In some application areas, there are guidelines for when such refinements should be made and what degree of accuracy is expected. For example, The Association for the Advancement of Cost Engineering (AACE) International has identified a progression of five types of estimates of construction costs during engineering: order of magnitude, conceptual, preliminary, definitive, and control. .2 Supporting detail. Supporting detail for the cost estimates should include: A description of the scope of work estimated. This is often provided by a reference to the WBS. Documentation of the basis for the estimate; i.e., how it was developed. Documentation of any assumptions made. An indication of the range of possible results; for example, $10,000 $1,000 to indicate that the item is expected to cost between $9,000 and $11,000. The amount and type of additional details vary by application area. Retaining even rough notes may prove valuable by providing a better understanding of how the estimate was developed. .3 Cost management plan. The cost management plan describes how cost variances will be managed (e.g., different responses to major problems than to minor ones). A cost management plan may be formal or informal, highly detailed or broadly framed, based on the needs of the project stakeholders. It is a subsidiary element of the project plan (discussed in Section 188.8.131.52). A Guide to the A Guide to the 7.3 COST BUDGETING Cost budgeting involves allocating the overall cost estimates to individual activities or work packages to establish a cost baseline for measuring project performance. Reality may dictate that estimates are done after budgetary approval is provided, but estimates should be done prior to budget request wherever possible.
.1 .2 .3 .4 Cost estimates Work breakdown structure Project schedule Risk management plan Project Project Management Management Body of Body of KnowledgeE L KnowledgeE PL MP AM SA S
Tools & Techniques
.1 Cost budgeting tools and techniques Outputs
.1 Cost baseline 7.3.1 Inputs to Cost Budgeting .1 Cost estimates. Cost estimates are described in Section 184.108.40.206. .2 Work breakdown structure. The WBS (described in Sect...
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