Project Estimations.pptx

Project Planning Techniques - based on PMBOK

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Project Planning TechniquesBM399

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Case Study Audit Report 42 on BH Car Park

Project Cost Management Estimate Costs

Determine Budget

Control Costs

Topics to be covered today:


Project Cost Management

2013 4 Project Planning Techniques - based on PMBOK

Project Cost Management – where does this fit?

Monitoring and Controlling Process Group

52013 Project Planning Techniques - based on PMBOK


Develop Project Management Plan – Data Flow Diagram



Direct and Manage Project Execution – Data Flow Diagram


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• Estimate Cost

• Determine Budget

• Control Costs


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Project Cost Management - Develop Project Management Plan - 1

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• The Project Management Plan integrates and consolidates all of the subsidiary management plans and baseline from the planning processes and includes but is not limited to:

• The life cycle selected for the project and the processes that will be applied to each phase


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• Results of the tailoring by the project management team as follows:– PM processes selected by the PM team– Level of implementation of each selected process– Descriptions of the tools and techniques to be

used for accomplishing these processes and– How work will be executed to accomplish the

project objectives


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• A change management plan that documents how changes will be monitored and controlled

• How integrity of the performance measurement baselines will be maintained

• Need and techniques for communication among stakeholders and

• Key management reviews for content, extent, and timing to facilitate addressing open issues and pending issues


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• The PM Plan can be either summary level or detailed, and

can be composed of one or more subsidiary plans. Each of

the subsidiary plans is detailed to the extent required by

the specific project. Once the project management plan is

baselined, it may only be changed when a change request

is generated and approved through the Perform Integrated

Change Control Process.


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• The cost management processes and their associated tools are usually selected during the project life cycle definition and are documented in the cost management plan.



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• The cost management plan can establish the following:

• Level of accuracy – including contingencies

• Units of measure – currency, days, hours, lump sum etc.

• Organisational procedure links – the WBS provides the framework for the CMP allowing for consistency with the estimates etc.



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• CMP (contd)

• Control of thresholds – agreed variation within limits

• Rules of performance management – ‘earned value management’ rules

• Reporting formats – format and frequency of reports

• Process descriptions – descriptions for each of the three cost management processes are defined



Project Cost Management – Project Cost Overview


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• Note:

• Estimating costs and determining the budget can overlap, particularly on small projects where one person may undertake both.

• However, the tools and techniques are different.

• The ability to influence costs is greatest at early stages of a project, making scope definition critical



Estimate Costs: Inputs Tools and Techniques

Project Cost Management – Estimate Costs


Estimate Costs - Data Flow Diagram



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• Estimate Costs - Inputs:• 1. Scope baseline

• Scope statement• WBS• WBS dictionary

• 2. Project schedule• 3. Human resource plan• 4. Risk register• 5. Enterprise environmental factors• 6. Organisational process assets



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• Estimate Costs – Tools and Techniques• 1. Expert judgement• 2. Analogous estimating• 3. Parametric estimating• 4. Bottom-up estimating• 5. Three-point estimates

– (ref: PERT – program evaluation and review technique)• 6. Reserve analysis• 7. Cost of quality• 8. Project management estimating software• 9. Vendor bid analysis



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• Estimate Cost – Outputs

• 1. Activity cost estimates

• 2. Basis of estimates

• 3. Project document updates



Project Cost Management – Determine Budget

Determine Budget: Inputs, Tool and Techniques, and Outputs



Determine Budget – Data Flow Diagram


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• Determine Budget – Inputs• 1. Activity cost estimate• 2. Basis of estimates• 3. Scope baseline

• Scope statement• WBS• WBS directory

• 4. Project schedule• 5. Resource calendars• 6. Contracts• 7. Organisational process assets



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• Determine Budget – Tools and Techniques

• 1. Cost aggregation

• 2. Reserve analysis

• 3. Expert judgement

• 4. Historical relationships

• 5. Funding limit reconciliation



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• Determine Budget – Outputs• 1. Cost performance baseline


Cost baseline, expenditure and funding requirements


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• Determine Budget – Outputs (contd)

• 2. Project funding requirements




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• Project cost control includes:

• Influencing the factors that create changes to the authorised cost baseline

• Ensuring that all the change requests are acted on in a timely manner

• Managing the actual changes when and as they occur

Project Cost Management – Control Costs


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• Project cost control also includes

• Monitoring cost performance to isolate and understand variances from the approved cost baseline

• Monitoring work performance against funds expended

• Preventing unapproved changes from being included in the reported cost or resource usage



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• Finally, project cost control includes:

• Informing appropriate stakeholders of all approved changes and associated costs

• Acting to bring expected cost overruns within acceptable limits




Cost control inputs, Tools and Techniques, and Outputs



Control Costs data Flow Diagram


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• Control Costs – Inputs• 1. Project management plan

• Cost performance baseline• Cost management plan

• 2. Project funding requirements• 3. Work performance information• 4. Organisational process assets

• Existing formal and informal cost control –related policies, procedures and guidelines

• Cost control tools and• Monitoring and reporting methods to be used



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• Cost Control – Tools and Techniques• 1. Earned value management

• Planned value• Earned value• Actual cost

– Variances will be monitored:• Schedule variance• Cost variance

– (These can be converted to efficiency indicators)



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• Cost Control – Tools and Techniques (contd)• 2. Forecasting (estimate at completion -

EAC)– Typically based on actual costs incurred tor work

completed, plus an estimate to complete (ETC) the remaining work

• 3. To-Complete Performance Index (TCPI)


To-Complete Performance Index (TCPI)


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• Cost Control – Tools and Techniques (contd)• 4. Performance Reviews

• Variance analysis• Trend analysis• Earned value performance

• 5. Variance analysis• 6. Project management software



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• Control Costs – Outputs• 1. Work performance measurements• 2. Budget forecasts• 3. Organisational process assets updates• 4. Change requests• 5. Project management plan updates

• Cost performance baseline• Cost management plan




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• We reviewed the processes involved in managing project costs under the following headings:

– Estimate Cost– Determine Budget– Control Costs– And looked at the ‘inputs’, ‘tools and techniques’

and ‘outputs’ that can be derived for each element of the cost management process


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QUESTIONS?

Project Estimations.pptx

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