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Cost Knowledge Area

Project Cost Management involves planning, estimating, budgeting, financing, funding, managing and controlling project costs to complete the project within the approved budget. It includes processes such as planning cost management, estimating costs, determining the budget, and controlling costs by monitoring the project costs and managing changes to the cost baseline. Project Cost Management is primarily concerned with the cost of resources needed to complete project activities and considers the effect of decisions on future recurring costs. It also recognizes that stakeholders measure costs differently and at different times in the project lifecycle.

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Eng Burhaanudiin Cumar
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48 views1 page

Cost Knowledge Area

Project Cost Management involves planning, estimating, budgeting, financing, funding, managing and controlling project costs to complete the project within the approved budget. It includes processes such as planning cost management, estimating costs, determining the budget, and controlling costs by monitoring the project costs and managing changes to the cost baseline. Project Cost Management is primarily concerned with the cost of resources needed to complete project activities and considers the effect of decisions on future recurring costs. It also recognizes that stakeholders measure costs differently and at different times in the project lifecycle.

Uploaded by

Eng Burhaanudiin Cumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PROJECT COST MANAGEMENT

Project Cost Management includes the processes involved in planning, estimating, budgeting, financing,
funding,
managing, and controlling costs so that the project can be completed within the approved budget.
The Project Cost Management processes are:
7.1 Plan Cost Management—The process of defining how the project costs will be estimated, budgeted,
managed, monitored, and controlled.
7.2 Estimate Costs—The process of developing an approximation of the monetary resources needed to
complete
project work.
7.3 Determine Budget—The process of aggregating the estimated costs of individual activities or work
packages to establish an authorized cost baseline.
7.4 Control Costs—The process of monitoring the status of the project to update the project costs and
manage changes to the cost baseline

KEY CONCEPTS FOR PROJECT COST MANAGEMENT


Project Cost Management is primarily concerned with the cost of the resources needed to complete
project activities.
Project Cost Management should consider the effect of project decisions on the subsequent recurring cost
of using,
maintaining, and supporting the product, service, or result of the project. For example, limiting the
number of design
reviews can reduce the cost of the project but could increase the resulting product’s operating costs.
Another aspect of cost management is recognizing that different stakeholders measure project costs in
different
ways and at different times. For example, the cost of an acquired item may be measured when the
acquisition decision
is made or committed, the order is placed, the item is delivered, or the actual cost is incurred or recorded
for project
accounting purposes. In many organizations, predicting and analyzing the prospective financial
performance of
the project’s product is performed outside of the project. In others, such as a capital facilities project,
Project Cost
Management can include this work. When such predictions and analyses are included, Project Cost
Management may
address additional processes and numerous general financial management techniques such as return on
investment,
discounted cash flow, and investment payback analysis.

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