Cost Management (Estimation Control) - Budget
Planning Cost Management
1. Memory formula:
The charter is advanced, the plan is met, the cost is calculated, and the management is convenient.
2. Story:
In an ancient kingdom, the king decided to build a magnificent castle, and this goal was specified in the "Project Charter". To achieve this goal, he needs to plan cost management. First, he consulted the "Progress Management Plan" to understand the timetable and work content of each stage of the castle construction.
He then called his consultants and engineers for a "planning session," in which they used an "alternatives analysis" tool to compare the costs and effects of different building materials and processes to determine the most economical, the most effective solution.
After careful consideration and discussion, they finally formulated a "cost management plan", which listed in detail the estimated cost of the castle construction, cost control methods and cost audit mechanism. With this plan, the king could better manage and control the cost of castle construction, allowing the project to be completed smoothly and within budget.
3. Explanation of reasons:
-
Input: The project charter and schedule management plan are the basis for planning cost management. They provide the project's goals, requirements and schedule, and provide direction and time frame for cost management.
-
Tool technology: Alternative plan analysis and planning meetings are important tools for planning cost management. They can help the project team compare different cost plans, choose the most economical and effective plan, and negotiate and decide the method and mechanism of cost management.
-
Output: The cost management plan is the result of planning cost management. It lists the estimated cost of the project, cost control methods and cost audit mechanism in detail, and provides a specific cost management plan for project execution and control.
estimated cost
1. Memory formula:
Plan basis, schedule wind, analogy reference, three down storage, quality backup, estimation based on cost determination.
2. Story:
In an old village, the village chief decided to build a new well. First, he refers to the "Cost Management Plan" and considers the "Scope Baseline" and "Project Schedule". He also checked the "Risk Register" to make sure he considered all possible risks.
The village chief then used a variety of tools and techniques for cost estimation. He refers to the cost of building wells in other villages (“analogous estimates”) and bases his calculations on the size and depth of wells (“parametric estimates”). He also considers the best, worst, and most likely scenarios ("three-point estimating") and works his way up from each component to the entire project ("bottom-up estimating").
He also considered different construction methods ("alternatives analysis") and set aside some additional funds to cover unknown risks ("reserve analysis"). He also considered the cost of maintaining the quality of the well (“cost of quality”).
Finally, the village chief came up with a "cost estimate" and documented his calculations and assumptions ("Estimate Basis"). This allowed him to clarify the budget and explain his plans to the villagers.
3. Explanation of reasons:
-
Inputs: The cost management plan, scope baseline, project schedule, and risk register provide the information and data needed to estimate costs, such as the project's cost control approach, project requirements and scope, project schedule, and possible risks.
-
Tool technology: analogy estimation, parameter estimation, three-point estimation, bottom-up estimation, alternative scheme analysis, reserve analysis and quality cost provide a variety of cost estimation methods and techniques, which can help the project team from different angles and levels Perform cost estimates and improve the accuracy of estimates.
-
Output: Cost estimation and estimation basis are the results of cost estimation, they provide the estimated cost of the project and estimation methods, basis and assumptions, and provide specific cost data and basis for project execution and control.
Budgeting
1. Memory formula:
Plan basis, estimate progress, risk coordination, research and evaluation report, pool limit, benchmark requirement, and budget determination.
2. Story:
In a bustling city, the mayor decides to build a new park. First, he refers to the "Cost Management Plan" and considers the "Scope Baseline". He looks at the Cost Estimate and Project Schedule, and studies the Risk Register. He also refers to the "agreement" with the contractor, as well as the "feasibility study report" and the "project evaluation report".
The mayor then used a variety of tools and techniques to create a budget. He aggregated all costs (“cost aggregation”) and performed a reserve analysis for possible risks. He also considered the city's funding constraints and made a balance ("funding constraints balance").
Finally, he developed a "cost baseline," which he used to measure the project's cost performance. He also calculates a "project funding requirement," which is the amount he needs to allocate from the city budget. With this information, the mayor can ensure park projects are completed on budget.
3. Explanation of reasons:
-
Input: cost management plan, scope baseline, cost estimate, project schedule, risk register, agreement, feasibility study report, project evaluation report provide the information and data needed to develop the budget, such as the cost control method of the project, the Requirements and scope, estimated cost of the project, schedule of the project, possible risks, terms and conditions of the contract, feasibility and benefits of the project.
-
Tool technology: cost summary, reserve analysis, balance of fund constraints provides methods and techniques for formulating budgets, which can help project teams summarize all costs, analyze and set reserves, balance fund constraints and needs, and improve budget accuracy and feasibility.
-
Output: Cost baseline and project funding requirements are the result of budget formulation, they provide the budget baseline and funding requirements of the project, and provide specific budget data and basis for project execution and control.
cost control
1. Memory formula:
Performance-based, earned value control, deviation trend, forecast, performance change, request.
2. Story:
At a fast-growing technology company, a project manager is working on a new application development project. He starts by referring to the Work Performance Data and the Cost Baseline to understand the current status of the project and expected costs.
The project manager then used Earned Value Management tools to control costs. He performed Earned Value Analysis to understand how the project's actual and expected costs varied, Variance Analysis to understand the causes of these variances, Trend Analysis to predict future cost trends, and Forecast ” to estimate the final cost of the project, and a “Performance at Completion Index” analysis was performed to understand the efficiencies required to complete the project.
Finally, he came up with "job performance information," which he used to measure the project's cost performance. If there are any discrepancies or issues, he raises a "change request" to adjust the project's schedule or resources.
3. Explanation of reasons:
-
Inputs: Work performance data and cost baselines provide the information and data needed to control costs, such as the project's actual costs, work completed, work outstanding, and expected costs.
-
Tool technology: Earned value management provides a systematic method to measure the cost performance and progress of the project, including earned value analysis, deviation analysis, trend analysis, forecast and completion performance index, which can help the project team understand the actual cost of the project , expected costs, cost variances, cost trends, and efficiencies required to complete.
-
Output: Work performance information and change requests are the result of cost control, they provide the cost performance information of the project and the request to adjust the project, and provide specific information and basis for the execution and control of the project.