1. Control Costs Process–Overview
Here are the various steps of the control costs process as listed in the PMBOK ® Guide, but let’s use the methodology of Six Sigma called DMAIC or Define-Measure-Analyze-Improve-Control, to group them logically. Six Sigma is normally used for managing quality of manufacturing processes, but the methodology can be considered analogous to the process of managing costs on a project.
|
Stage |
DMAIC |
Control Costs Process element |
| Stage 1. | Define | The cost performance plan is where the cost management processes are defined and the criteria set forth for controlling project costs. |
| Stage 2 | Measure | Monitoring cost performance (CV, CPI) and work performance (SV, SPI) to detect variances from cost performance baseline. Monitoring cost expenditures (AC) so that they do not exceed periodic funding requirement limits. |
| Stage 3 | Analyze | Forecasting estimate at completion (EAC) and comparing to budget at completion (BAC) based on current trends. Using To-Complete Performance Index or (TCPI) to calculate level of cost performance that needs to be achieved to bring EAC in line with BAC by the end of the project. Determining the factors that create changes to the cost performance baseline. |
| Stage 4 | Improve | Corrective action to bring current cost overruns within acceptable limits. These actions can result in change requests.
Another type of change request is a change to the cost performance baseline if the current one is shown to be unrealistic. This must be approved by sponsor and stakeholders. |
| Stage 5 | Control | Preventive action to bring future costs overruns within acceptable limits—these can also result in change requests (see above under Improve). |
2. Inputs to Control Costs Process
The four inputs are the Cost Management Plan, which helps give the template for the control costs process in general (listed in dark red), and then it gives the cost goal and actual costs (listed in green). The Organizational Process Assets are really software and company guidelines that assist with ALL aspects of the Control Costs Process so are not given any particular color.
| Input | Stage | Explanation | |
| 1. | Project Management Plan—Cost Management Plan | Stage 1
Define |
Contains cost baseline, guidelines on how to measure (stage 2), analyze (stage 3), improve and control (stage 4) cost overruns. |
| Project Management Plan—Cost Performance Baseline | Stage 2 Analyze |
This gives the equivalent of the cost goal for each point in the project. | |
| 2. | Project Funding Requirements |
Stage 2 Analyze |
This gives the “control limit” for the costs for each funding period in the project. |
| 3. | Work Performance Information |
Stage 2 Analyze |
This gives the actual costs for each point in the project. |
| 4. | Organizational Process Assets | TOOLS | These are the tools with which the control costs process is carried out: both software and company policies/procedures. |
These inputs will then be used in conjunction with the tools & techniques outlined in the next post to generate all the stages of the Control Costs process.
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