7.1 Plan Cost Management
The Plan Cost Management process institutes policies, procedures, and documents which plan, manage, update and control project cost. It regulates how project costs are managed through the project life cycle. Knowledge areas associated with the plan cost management process are:
- 7.2 Estimate Costs
- 7.3 Determine budget
The Inputs, Tools & Techniques and Outputs for plan cost management are listed in figure 15 below.
Figure 15. 7.1 Plan Cost Management: Inputs, Tools & Techniques, and Outputs. Reprinted from "A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition" by Project Management Institute, 2013, p.195. Copyright 2013 by Project Management Institute, Inc. Reprinted without permission
The cost management plan is a product of analytical techniques and judgment used with information provided by the scope and schedule baselines. The project charter establishes an initial budget. Cost breakdowns will be allocated as more information flows in. Many costs can come from past jobs as part of the organizational process assets. Published cost rates, exchange rates and other environmental factures my influence the development of the cost management plan.
The cost management plan feels like a half done process, because it doesn't include the procurement process. However the PMBOK Guide definition for this process is about establishing cost control plans, structure and establishing standards for currency, units of measure, and cost thresholds, all used to monitor the project costs.
Enterprise Environmental Factors are intangibles such as, culture, politics, unpredictable geographical environmental effects typical weather for the area etc. They can be very impacting to the cost plans of a project for example, the traditional work day or hours may what you are used to. Some level of cultural competence is required by the project team. In PMGT612 we studied the cultural effects on projects. A blog I completed address the importance for project teams to have cultural competence. see 7.1.1
Tools & Techniques
Analyzing costs and value are part of the process for planning Cost Management. Its one thing to add numbers together off the WBS dictionary but to under stand how the numbers impact the value of the project in the near and long term are also important. As is, tracking and reporting those values through the project. In PMGT502 a report I accomplished on that subject is titled WBS 8.3Value Analysis Reporting (see 7.1.2); it gives an overview of some of the analytical tools and the importance of reporting.
Another tool used during the course was Expert Judgement. You wouldn't think of a bunch of students having expert judgement but you would be surprised. During PMGT501's sustainable home project we were assign to work through some budgetary challenges and include those in our final document. Below is the Expert Budget Approach we came up with.
The culmination of all the above is the Cost Management plan. The cost management plan defines:
- Units of measure
- levels of precision
- levels of accuracy
- Organizational procedures and links
- cost controls
- rule of performance measures
- reporting format
- process descriptions
- and other details
Most of these were accomplished during the setup of MS Project assignments which makes it difficult to show in this format. So not artifact will be included for this process. see 7.1.3