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Categories: cost management
Project cost management is the process that forces you to think about the procedures, policies and documents you need to manage your project finances. Many of these will already be in place but you’ll use the process to work out how you will apply them in your project and to make sure that you’ve got everything you need to be able to adequately manage, spend and control your budget.
As with all PMBOK® processes, there are inputs, outputs and the tools and techniques you need to get the job done.
Inputs
Your project management plan
Your project management plan is critical for a lot of the processes, so it’s definitely something that you’ll be looking at here. In fact, your cost management plan is one of the sub-plans, so you should pull out your overall plan and start to think about how managing costs fits in with the rest of your project processes.
Your project charter
Your overall summary budget comes from the charter. You’ll use this figure, and any other bits of information from the charter, to develop a detailed project budget. Ideally your charter will give you lots of leeway each way because you can guarantee that the person who came up with the summary budget figure didn’t have as much information about how much the project will cost as you will in a few weeks.
Enterprise environmental factors and organisational process assets
These crop up all over the PMBOK. They really relate to how your company does business so they include things like:
The market conditions in your region and industry that may affect how you work
- Currency exchange rates
- Your organisational culture and your senior managers’ approach to spending
- The cost of resources in your area
- What software you have available to help you manage project budgets
- What requirements and controls the Finance team puts on you with regard to policies, reporting and governance
- Company estimating procedures
- Historical information from lessons learned databases around how much similar project activities costs.
Tools and techniques
Expert judgement
You’ve got to love your subject matter experts. When you need to put together your cost plan, experts are essential. They’ll be able to give you a view of what’s realistic, based on their prior experience, previous projects and their background.
Analytical techniques
You might have several different ways that the project could be funded and analysis will help you determine which is the best approach for this project. That’s not as complicated as it sounds – you’ve probably made ‘make or buy’ decisions before without realising that they formed part of this section of the process.
Meetings
Who doesn’t like a good meeting? I’m surprised meetings don’t appear more often in the PMBOK. Putting together the cost management plan isn’t something that the project manager can do alone, so throw a meeting and invite some buddies along to thrash out how you are going to manage the cash.
Outputs
The cost management plan
The output of all of these meetings, expert discussions is the cost management plan. The document sets out how you will apply the processes and principles necessary for managing the budget, any assumptions you’ve made and key decisions such as funding and timescales.
Check out these 7 things for your project’s cost management plan to check that you’re progressing along the right lines.
Next time in this series I’ll look at estimating project costs. In the meantime, what questions do you have about cost management? Let me know in the comments and I’ll answer them in a future article.
Posted on: November 08, 2014 10:07 AM |
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