The latest in the ongoing series of articles helping you get “PMP fit” explores the often avoided Project Cost Management knowledge area. To paraphrase a well-known company, just get at it. When you have read this article and completed your studying, you may well be asking yourself why you were so concerned about it…
The basic premise of EVM is that we can assign a value to each task. We can then determine the progress that we have made on our project relative to schedule by comparing the amount of work completed with the amount of work planned to have been completed at the reporting date, and the progress relative to budget by comparing the amount of money that we have actually spent with the amount of money that we planned to spend.
A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.
The author presents an approach for using a rate to monitor projects, based on the re-evaluation of two key concepts, work total, and the rate per unit of work. By periodically recalculating and updating rate values, considering the comparison of the actual work vs. the planned work, the project manager may develop reliable databases for use in future evaluations and follow-up projects.
A cost-estimating worksheet can help you develop cost estimates when quantitative methods or bottom-up estimates are developed. Quantitative methods include parametric estimates, analogous estimates and three-point estimates.
Bottom-up estimates are detailed estimates done at the work package level. Detailed information on the work package and other direct/indirect costs are used to determine the most accurate estimate possible. Use this worksheet to help you keep track.
The cost management plan is a component of the project or program management plan that describes how costs will be planned, structured and controlled. It includes a description of how costs will be estimated and budgeted, and helps define the methods used.
The Project Charter formally authorizes a project or phase. It defines the reason for the project and assigns a project manager--and the PM's authority level. The content of the Charter should describe the project in high-level terms.
You've created your Work Breakdown Structure and are now in the process of estimating costs. Use this form for each project to keep track of your Activity Cost Estimates.
Using a step-by-step approach to budgeting will make your life easier in the long run, allow you to accurately answer any questions about project expenditures, make much more accurate future cost estimates for similar projects and generally give you more control over the project. Here's some help.
The answer is “yes”, even though the typical fixed-price mentality violates the values stated in the Agile Manifesto. But fixed-price contracts are necessary for the market, so agile projects will have to adjust and offer a workaround.
When one PM was asked to list the key requirements for a PMIS that would enable it to better support project and organizational effectiveness, he thought about past project, portfolio and program management experiences. The result? A “dream list” of features for a PMIS to support large, traditionally managed projects...a list that was surprisingly agile.
Some studies have indicated that the real benefits of offshore outsourcing can be diminished by issues in communication, skill sets and accountability. But if managed properly, offshore IT projects can reap substantial rewards.
What each vendor and client might think is black and white about their project can actually be gray. Just recognizing and accepting this is a conundrum--and resolving it requires aligning perspectives for the good of the project. Do you have the flexibility to change, collaborate and communicate?
Is "consultant" a dirty word? Many consultants get a bad name from the fact that they become indistinguishable from the organizational employees that they work alongside. How do you know that hiring a consultant is a good idea?
What comes to mind when you ponder the possibility of engaging a consultant? Dread or excitement? The high cost or opportunity for growth? Most of us have heard good things and bad things about using consultants, most of which are true.
Many consulting engagements see frustrated consultants because they are not allowed to do what they feel is needed to maximize the chances of success. Here, we look at how these scenarios can be avoided--something that starts with trust.
Consultants can be a helpful resource on a project or they can take up valuable space. Here are some ideas for the best way to deal with consultants and make sure they are beneficial to the project.
Choosing the best framework or methodology requires thought, but be careful not to overanalyze it. PMs can gain valuable insight from Bruce Lee’s philosophies, which offer a sound approach to achieve success in any area.
There is one aspect of project management where it's rare to find any consistency at all within PMOs: project financials. Let’s look at some of the different options and see if we can figure out some models that might work effectively.
Why is LOE as important for a project as other aspects like stakeholder satisfaction, cost overshoot and schedule variance? And are you approaching it the right way?
The best part about Project Cost Management is that there are only three processes. And while the first two processes are light dumbbell lifting, the third throws some heavy barbell exercises your way. Are you prepared?
Nothing comes free, but do you understand the true cost? When we look for ways to improve business efficiency, we consider two primary factors. But sometimes organizations push so hard for efficiency that they ignore the potential impact--and that’s when the problems start.
Whatever the approach, mandate or processes adopted by each organization, you as the PM should be aware of the following best practices and ensure that they are adopted in one way or the other to guarantee your project’s financial transparency.