#PM Cost Management—Using Six Sigma to Look at the Outputs of the Control Costs Process

Posted on October 24, 2012 by Jerome Rowley

 

1. Introduction

In the last post, I organized the tools & techniques of the Control Costs Process in terms of 5 stages, each corresponding to one of the stages of the methodology of Six Sigma, or DMAIC (Define-Measure-Analyze-Improve-Control).

This is obviously not the standard PMBOK Guide approach, but I thought that organizing the stages of the Control Costs process in this way would make a little more sense out of the inputs, tools & techniques, and outputs of this process.

2. Outputs of the Control Costs Process

Here are 5 techniques of the Control Costs Process listed with the numbers assigned to them on p. 181-187 of the PMBOK® Guide. The tool listed for the Control Costs Process, Project Management Software, is one which can be used in conjunction with any of the 5 techniques and so it is not listed below in the chart.

Stage

Output

Explanation
Stage 1 Define N/A The cost performance plan represents Stage 1 of the process, but it is an input to the Control Costs process, not a tool & technique.
Stage 2 Measure Work Performance Measurements This is the output of the earned value measurement technique, expressed in terms of CV, CPI, SV, and SPI.
Stage 3 Analyze Budget Forecasts

 

 This is the output of the forecasting technique, expressed in terms of the estimate at completion or EAC, or possibly a bottom-up EAC value may be calculated from the WBS.
 

Project Document Updates

 

 Updates to the EAC and its variance from the BAC (budget at completion) are added to the document which contains the project cost estimates.
Organizational Process Assets Lessons learned can be updated with the causes of the variances determined by the variance analysis technique, and the corrective actions taken to reduce them.
Stage 4 Improve Change Requests Change requests can be a) corrective actions to bring current cost overruns within acceptable limits, or b) changes to the cost performance baseline itself if the budget is determined to be unrealistic.

 
Project Management Plan The cost management plan is a component of the overall project management plan, and it will include updates to the cost performance outline if it is changed due to a change request.
Stage 5 Control Change Requests Change requests can be preventive actions to bring future projected cost overruns within acceptable limits.

This concludes the analysis of the inputs, tools & techniques, and outputs of the Control Costs process as seen through the methodology of Six Sigma.

Tomorrow I will start taking a look at the 5th Edition of the PMBOK guide which is due to be published in a little over a month and seeing how it reflects the future of Project Management.

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