Passing the #PMP Exam: Inputs and Outputs—Cost Knowledge Area



1. Introduction

In this next series of posts on memorizing the processes, we move on to the final step 6, which is memorizing the INPUTS & OUTPUTS associated with each of the 42 processes. In order to breakdown the memorization into more bite-size chunks, I am going to break down this topic into at least 9 posts, one for each knowledge area. (There may be some knowledge areas that require more than one post.)

 This post covers chapter 7 of the PMBOK® Guide, which covers the Cost Knowledge Area. This knowledge area contains 3 processes, two of which are in the Planning Process group, and the last of which is in the Monitoring & Controlling Process Group.

2. Review of processes in Cost Knowledge Area

As a review, here is a chart which gives a summary of the processes themselves, plus the tools & techniques used as part of that process.

Process
Number & Name
Process Description Tools & Techniques
7.1 Estimate Costs Developing an approximation of the monetary resources needed to complete project activities. 1. Expert judgment

2. Analogous estimating

3. Parametric estimating

4. Bottom-up estimating

5. Three-point estimating

6. Reserve analysis

7. Cost of quality

8. Project management estimating software

9. Vendor bid analysis

 

7.2 Determine Budget Sums up the estimated costs and add reserves to establish an authorized cost baseline. 1. Cost aggregation

2. Reserve analysis

3. Expert judgment

4. Historical relationships

5. Funding limit reconciliation

 

7.3 Control Costs Monitoring the status of the project to update project budget and manage changes to the cost baseline. 1. Earned value management

2. Forecasting

3. To-complete performance index (TCPI)

4. Performance reviews

5. Variance analysis

6. Project management software

3. Definition of inputs, outputs

The inputs for a given process are the documents or results of other processes that are used in order to do the process. The results of going through the process are the outputs. These outputs are then used as inputs for some other process.

4. Generic inputs

Before we start, there are two “generic” inputs that are used in many, many processes. The term “generic” inputs is not to be found in the PMBOK® guide; that’s just my term I made up in our study group to clue people in to the fact that they are included as an input in more processes than you could probably name off the top of your head.

A. ENVIRONMENTAL ENTERPRISE FACTORS (EEF)

This is the “company culture”, or factors that are external to the project but which influence the project’s success. These can include the company databases and, in particular, the project management software used by the company.

B. OPERATIONAL PROCESS ASSETS (OPA)

Written procedures, policies, and guidelines that are used by the company to guide all operations, including projects. Lessons learned would be an important part of OPA.

Think of the operational process assets as the “hard copy” (written procedures), and the environmental enterprise factors as the “soft copy” (software and the company culture or “unwritten rules” that govern how work is done).

NOTE: Tools & Techniques will be listed for the purpose of completeness and for reference, but their detailed description will be omitted, because it is contained in the blog posts specifically covering Tools & Techniques for that knowledge area.

7.1 ESTIMATE COSTS

INPUTS

7.1.1 Scope baseline

The scope baseline, which consists of the scope statement, the WBS, and the WBS dictionary, is an output of the 5.3 Create WBS process.

7.1.2 Project schedule

The project schedule is an output of the 6.5 Develop Schedule process.

7.1.3 Human resource plan

The Human resource plan is an output of the 9.1 Develop Human Resource Plan process.

7.1.4 Risk register

The risk register is an output of the 11.2 Identify Risks process.

7.1.5 Enterprise environmental factors

Commercial information about standard costs for material, equipment, and human resources.

7.1.6 Organizational process assets

Cost estimating templates.

TOOLS & TECHNIQUES

7.1.1. Expert judgment

7.1.2 Analogous estimating

7.1.3 Parametric estimating

7.1.4 Bottom-up estimating

7.1.5 Three-point estimates

7.1.6 Reserve analysis

7.1.7 Cost of quality

7.1.8 Project management estimating software

7.1.9 Vendor bid analysis

OUTPUTS

7.1.1 Activity cost estimates

Probable costs required for resources required to complete project work.

7.1.2 Basis of estimates

Documentation of assumptions made, known constraints, range of estimates, and confidence level of estimate.

7.1.3 Project document updates

Risk register may be updated.

7.2 DETERMINE BUDGET

INPUTS

7.2.1 Activity cost estimates

Output of previous process 7.1 Estimate Costs.

7.2.2 Basis of estimates

Output of previous process 7.1 Estimate Costs.

7.2.3 Scope baseline

The scope baseline, which consists of the scope statement, the WBS, and the WBS dictionary, is an output of the 5.3 Create WBS process.

7.2.4 Project schedule

The project schedule is an output of the 6.5 Develop Schedule process. Includes planned start and finish dates for the project’s activities, milestones, work packages, planning packages, and control accounts.

7.2.5 Resource calendars

Shows which resources are assigned to the project during each time period of the project.

7.2.6 Contracts

Information from the contracts relating to purchased products, services, or results.

7.2.7 Organizational process assets

TOOLS & TECHNIQUES

7.2.1 Cost aggregation

7.2.2 Reserve analysis

7.2.3 Expert judgment

7.2.4 Historical relationships

7.2.5 Funding limit reconciliation

OUTPUTS

7.2.1 Cost performance baseline

Time-phased budget from the beginning of the project to the budget at completion or BAC.

7.2.2 Project funding requirements

Funding requirements for each period (quarter or year) are derived from the cost baseline.

7.2.3 Project document updates

Updates may be made to risk register, cost estimates, and the project schedule.

7.3 CONTROL COSTS

INPUTS

7.3.1 Project management plan

It includes the cost performance baseline, and the cost management plan (how to manage and control project costs).

7.3.2 Project funding requirements

These are the total funding requirements and the periodic funding requirements derived from the cost baseline.

7.3.3 Work performance information

Information about project progress towards completion of the deliverables, and the costs that have been incurred for completing the project work up to this point.

7.3.4 Organizational process assets

Cost control policies and tools.

TOOLS & TECHNIQUES

7.3.1 Earned value management

7.3.2 Forecasting

7.3.3 To-complete performance index

7.3.4 Performance reviews

7.3.5 Variance analysis

7.3.6 Project management software

OUTPUTS

7.3.1 Work performance measurements

CV = EV – AC, CPI = EV/ AC, SV = EV – PV, SPI = EV/PV are calculated for the work packages and control accounts in the WBS.

7.3.2 Budget forecasts

EAC or the estimate to completion is calculated using one of the formulas

EAC = AC + (BAC – EV)

EAC = AC + (BAC – EV)/CPI

EAC = AC + (BAC – EV)/CPI*SPI

Which one is used depends on whether the cause for the current variance is a one-time delay, a continuing delay that effects the costs, or a continuing delay that effects both the costs and the schedule.

7.3.3 Organizational process assets updates

Causes of variances, corrective actions taken, or lessons learned related to project cost control.

7.3.4 Change requests

Change requests are updated if an analysis of the project performance results in a change request to the cost performance baseline.

7.3.5 Project management plan updates

Specifically, updates to the cost performance baseline and the cost management plan.

7.3.6 Project document updates

Cost updates are updated.

The next post will cover the inputs and outputs of the Quality Knowledge Area.

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