Project Cost Management is a method that uses technology to measure cost and productivity through the full life-cycle of enterprise level projects. PCM encompasses several specific functions of project management including estimating, job controls, field data collection, scheduling, accounting and design.
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.
What are the four 4 main processes of cost management?
While cost management overall is a very complicated process and a critical project management knowledge area, we can break it down into four processes:
- Resource planning. …
- Cost estimation. …
- Cost budget. …
- Cost control.
The 5 costs they cover are:
- Direct cost.
- Indirect cost.
- Fixed cost.
- Variable cost.
- Sunk cost.
What is the importance of project cost management?
Project cost management sets the baseline for project costs. Effective cost management ensures that a project’s budget is on track and will be completed according to its planned scope. Without cost control, a company can easily lose money and costs can go above project profit.
How are project costs aggregate?
Cost aggregation is simply summing the costs for each work package to the control account up to the project level. You can aggregate this information by time period to see the scheduled spending per time period. Here, you can see activities and costs for the playground installation for a childcare center.
How is Project Cost Management different when using an agile approach?
Cost is a project’s financial budget. When you work on an agile project, you focus on value, exploit the power of change, and aim for simplicity. … Because of this emphasis on value, change, and simplicity, agile projects have a different approach to budget and cost management than traditional projects.
The principles of effective cost management
- Provide clear, consistent performance objectives. …
- Provide knowledge, tools to succeed. …
- Understand true costs. …
- Excellence: The only acceptable performance target. …
- Reduce organizational complexity. …
- Commit to broad-based, knowledge-driven involvement.
What is cost of project and its components?
Expenses are the basic part of any project. Managing them is one of the PMBOK 10 knowledge areas. 2. Human Resources – The labor cost or the staff cost which includes all the human resources such as project manager, team members other indirect costs such as janitor, cleaners, security, etc.
What factors affect cost management?
So cost management is important in construction project to ensure the success of project, the most factors affected in cost management that indicated through literature review in this study are: Poor scope definition, Inaccurate activity cost estimate, Poor work breakdown structure definition, Change in schedule