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Costs (Control Costs/EVM (AC - Actual Cost - Total costs (ACWP), EV -…
Costs
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Estimate costs
- Estimate costs for all resources (labor,
material, services
- Include a cost contingency
- Tradeoff between scope, time and cost
- Expressed in monetary value
- Basis of estimates should be documented
- Tom bottom (-25% -> +75%)
- Bottom Up (-5% -> +5%)
Reserve analysis
- Provision of time or costs for unforseen events
- Management Fee (Sponsor)
- Owned by management
- Manage unknown-unknown
- Contingency Reserve (PM)
- owned by project manager
- not included in work pacjage estimates
- cannot be used by team without approval
Life cycle costing
- Simlar to TCO
- Include development, operational, disposal costs when evaluating alterntives
- Project decisions may be influenced by expected opertional costs
Determine Budget
Cost Baseline
- Calculated by cost aggregation along the WBS
- Cost baseline is also known as authorized funds
- Time phased according to project schedule
- Compare work completed with planned costs
- Can be represented graphically by S-curve
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Control Costs
- Determining the actual costs
- Compare the work performed with cost baseline
- Compare the work performed with actual costs
- Compare actual costs with authorized funds
- Estimating future performance
- Identifying cost changes and their impact
- Encouraging positive costs changes and discouraging negative changes
- Ensuring changes go through a change control system
Cost Types
- Indirect Costs (not part, but required)
- Direct Costs (incurredby the project)
- Fixed Costs (no impacted by size of project)
- Variable Costs (depend on the size of the project)
- Sunk Costs (cannot be avoided in case of cancellation)
- Prospective costs (can be avoided)
Measuring
- Weighted Milestones (longer activities)
- Fixed Formula (work packages smaller than 2 reporting periods)
- Percentage Complete (subjective from % of work, WP's are measurable)
- Percent Complete with Milestone Gates (subjective limited to MS)
- Level of Effort (Time) (measures proportionally to elapsed time)
- Apportioned effort (performance of other WP)
Cost Management Plan
- Responsibilities
- Estimating methods
- Budget change procedures
- Actual cost assessment methods
- Methods to assess status, progress, variance and forecast
- Acceptable range of cost variance
- WBS control level
- Reports