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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 47 processes.   In order to breakdown the memorization into more bite-size chunks, I am breaking down the processes in the 10 knowledge areas into 2 or 3 posts each.

This post covers chapter 7 of the PMBOK® Guide, which covers the Cost Knowledge Area. This knowledge area contains 4 processes, three of which are in the Planning Process group, and the last of which is in the Monitoring & Controlling Process Group.

(I am splitting the discussion of the Inputs & Outputs into two different posts; this post will cover Processes 7.3 Determine Budget and 7.4 Control Costs.)

2.  Review of processes 7.3 and 7.4 ITTOs (Inputs, Tools & Techniques, and Outputs)

There are a total of four processes in the Cost Management Knowledge Area.   Because of the large number of inputs and outputs, I am splitting my discussion of the inputs and outputs into two different posts, each one of which will cover two of the processes.    In that way, I can describe the inputs and outputs for these processes in a little bit of detail without the post becoming too long.

Here is a chart which shows the first and second processes, 7.3 Determine Budget and 7.4 Control Costs, together with their tools & techniques (which are discussed in a previous post) and their inputs & outputs.

NOTE:  the generic inputs known as Environmental Enterprise Factors and Operational Process Assets are given by their acronyms EEFs and OPAs, respectively.

Process Name	Tools & Techniques	Inputs	Outputs
7.3 Determine Budget	1. Cost aggregation 2. Reserve analysis 3. Expert judgment 4. Historical information 5. Funding limit reconciliation	1. Cost management plan 2. Scope baseline 3. Activity cost estimates 4. Basis of estimates 5. Project schedule 6. Resource calendars 7. Risk register 8. Agreements 9. OPAs	1. Cost baseline 2. Project funding requirements 3. Project documents updates
7.4 Control Costs	1. Earned value management 2. Forecasting 3. To-complete performance index (TCPI) 4. Performance reviews 5. Project management software 6. Reserve analysis	1. Project management plan 2. Project funding requirements 3. Work performance data 4. OPAs	1. Work performance information 2. Cost forecasts 3. Change requests 4. Project management plan updates 5. Project documents updates 6. OPAs updates

3.  Outputs of processes 7.3 and 7.4

7.3 Determine Budget is part of the planning process group; 7.4 Control Costs is part of the monitoring & controlling process group.

a. Cost baseline (7.3 Determine Budget)

This is the main output of this process.   The cost baseline is defined as the time-phased project budget, including contingency reserves but excluding management reserves, which can be changed only through formal change control procedures and is used as a basis for comparison with actual results (hence the term “baseline”).

b. Project funding requirements (7.3 Determine Budget)

Total funding requirements and period funding requirements are derived from the cost baseline.    The total funds required are those in the cost baseline plus management reserves.

c. Project documents updates (7.3 Determine Budget, 7.4 Control Costs)

The project documents that may be updated in the process 7.3 Determine Budget  are

• Risk register
• Activity cost estimates
• Project schedule

The project documents that may be updated in the process 7.4 Control Costs are

d. Work performance information (7.4 Control Costs)

Using work performance data, work performance information is calculated using the earned value management quantities such as SV, SPI, CV, CPI, TCPI, and VAC, for work packages and control accounts.

e. Cost forecasts (7.4 Control Costs)

EAC (Estimate At Completion) is determined based on a calculated value or a bottom-up estimation based on the remaining work.

f. Change requests (7.4 Control Costs)

Change requests may include corrective or preventive actions, or a change to the cost baseline itself.  These requests are processed in process 4.5 Perform Integrated Change Control

g. Project management plan updates (7.4 Control Costs)

The cost baseline and the cost management plan may be updated as a part of this process.

h. Project documents updates (7.3 Determine Budget)

These include the

• Cost estimates
• Basis of estimates

i. OPAs updates

These include the

• Causes of variances
• Corrective action or preventive action recommended, and the reasons for the recommendation
• Financial databases
• Lessons learned from cost control

4.  Inputs of processes 7.3 and 7.4 

a. Cost management plan (7.3 Determine Budget)

This is the output of 7.1 Plan Cost Management.   It describes how the project costs will be aggregated into the project cost estimate, the cost baseline, and the project budget.    The cost estimate is the cost of all activities, the cost baseline is the cost estimate plus contingency reserves (cost of risk responses corresponding to risks in the risk register), and the project budget is the cost baseline plus management reserves (cost of workarounds for unplanned for risks).

b. Scope baseline (7.3 Determine Budget)

Contains the three elements of

• Project scope statement–may include funding constraints, that is, formal limitations by period for expenditure of project funds
• WBS (Work Breakdown Structure)–provides relationship among all the project deliverables
• WBS Dictionary–provides a description of the deliverables and a description of the work required to produce each deliverable

c. Activity cost estimates (7.3 Determine Budget)

The cost estimates of individual activities will be aggregated in the “cost aggregation” technique used in this process.

d. Basis of estimates (7.3 Determine Budget)

Specifies any basic assumptions dealing with the inclusion or exclusion or indirect or other costs in the project budget.

e. Project schedule (7.3 Determine Budget)

Includes start and finish dates for the project’s activities, milestones, work packages, and control accounts.   This is used in the “cost aggregation” technique used in this process to aggregate costs in the calendar period in which they are incurred.

f. Resource calendars (7.3 Determine Budget)

Provides information on which resources are assigned to the project and when they are assigned.

g. Risk register (7.3 Determine Budget)

Used to aggregate risk response costs to be included in the contingency reserves.

h. Agreements (7.3 Determine Budget)

Contains information on costs relating to products, services, or results that are purchased for use on the project.

i. OPAs (7.3 Determine Budget, 7.4 Control Costs)

The OPAs that are considered part of the 7.3 Determine Budget and 7.4 Control Costs processes are

• Formal and informal policies, guidelines, and procedures related to cost budgeting
• Cost controls
• Monitoring and reporting methods

j. Project management plan (7.4 Control Costs)

This includes the two components

• Cost baseline–this is what is compared to actual results to see if a change is necessary
• Cost management plan–describes how the project costs will be managed and controlled

k. Project funding requirements (7.4 Control Costs)

Includes project expenditures plus anticipated liabilities.

l. Work performance data (7.4 Control Costs)

Includes information about project progress, and about costs which have been authorized and incurred.

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