4squareviews

This post covers the outputs of the Plan Cost Management process, namely the Cost Management Plan and what it contains.

7.1.3 Plan Cost Management:  Outputs

7.1.3.1 Cost Management Plan

There is only one output, the Cost Management Plan, which as explained in an earlier post, gives guidelines that help with all of the other cost management practices.   The PMBOK Guide simply lists them in no particular order, but I’m grouping them based on the process they are associated with.

7.2 Estimate Costs

• Units of measure–this will be in dollars or the base currency of whatever country the project is being done in
• Level of precision–how will the cost estimates be rounded up or down
• Level of accuracy–what is the acceptable range, usually expressed in terms of plus or minus percentage, for determining realistic cost estimates.

7.3 Determine Budget

• Organizational Procedures links–the Work Breakdown Structure is the framework which can be used to determine the overall budget based on estimates of the costs of individual work packages.

7.4 Control Costs

• Rules of performance measurement–Earned Value Management or EVM is a tool used in monitoring the performance of a project, including whether it is ahead of, on, or behind schedule.   The rules of how EVM will be used on the project should be specified, usually using one of the two measures Schedule Performance Index (SPI) or Schedule Variance (SV).
• Control thresholds–once a variance is detected, the threshold should be set (usually in terms of a percentage deviation from the baseline plan as expressed in the SPI) ,so that any amount of variation above that threshold will cause certain actions to be taken.
• Reporting formats–when the work performance reports are sent to the stakeholders, the formats of those reports, which stakeholders receive them, and the frequency of those reports should be specified

Now let us turn to the next planning process, where we estimate the costs for each work package in the WBS.

Filed under: Uncategorized |