A User's Manual to the PMBOK Guide, Fifth Edition

Chapter 7

Planning Cost

TOPICS COVERED

Project Cost Management

Plan Cost Management

Estimate Costs

Determine Budget

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.

Along with the project schedule, which was addressed in the previous chapter, the project budget is one of the most important documents in the project. Cost estimates are developed for cost categories and work breakdown structure (WBS) elements and are then applied across the schedule to develop a funding curve and a cost baseline.

The cost management processes can also analyze costing options by weighing the lifecycle cost of investing more in the project development in order to have a lower cost in maintaining the product, or investing less up front and having to spend more on maintenance and upkeep.

Plan Cost Management

Plan Cost Management is the process that establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs. When planning how to manage the project costs the team will take into consideration how costs will be estimated, the accuracy level needed in the budget, and the measurements that will be used to monitor the budget status. Figure 7-1 shows the inputs, tools and techniques and outputs for the Plan Cost Management process. Figure 7-2 shows a data flow diagram ...