What’s New in Project Cost Management (pt 1)
From the The Money Files Blog
by Elizabeth Harrin
A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts.
Written by Elizabeth Harrin from RebelsGuideToPM.com.
Recent Posts
How to learn AI the sensible way
Making sense of project cost reports
How real PM mentoring actually works
The Accidental Product Manager: What project managers need to know
How healthy are your project finances?
Categories
accounting,
agile,
ai,
appraisals,
Artificial Intelligence,
audit,
Backlog,
Benchmarking,
benefits,
Benefits Management,
Benefits Realization,
Bias,
books,
budget,
Business Case,
business case,
business case,
Career Development,
Career Development,
carnival,
case study,
Change Management,
checklist,
collaboration tools,
communication,
Communications Management,
competition,
complex projects,
Conferences,
config management,
consultancy,
contingency,
contracts,
corporate finance,
corporate finance,
cost,
Cost Management,
cost management,
credit crunch,
CRM,
data,
data security,
debate,
Decision Making,
delegating,
digite,
earned value,
Education,
Energy and Utilities,
Estimating,
events,
FAQ,
financial management,
financial management,
forecasting,
future,
GDPR,
general,
Goals,
Governance,
green,
Information Technology,
Innovation,
insurance,
interviews,
it,
Knowledge Management,
Leadership,
Lessons Learned,
measuring performance,
Mentoring,
merger,
methods,
metrics,
multiple projects,
negotiating,
Networking,
news,
Olympics,
organization,
Organizational Culture,
outsourcing,
personal finance,
Planning,
pmi,
PMO,
PMO,
Portfolio Management,
portfolio management,
presentations,
privacy policy,
process,
procurement,
product management,
productivity,
Program Management,
project closure,
project data,
project delivery,
Project Success,
project testing,
prototyping,
qualifications,
Quality,
quality,
Quarterly Review,
records,
recruitment,
reports,
requirements,
research,
resilience,
Resource Management,
resources,
risk,
Risk Management,
ROI,
salaries,
Schedule Management,
Scheduling,
scope,
Scope Management,
security,
small projects,
Social Impact,
social impact,
social media,
software,
software,
software,
Stakeholder Management,
stakeholders,
Strategy,
success factors,
supplier management,
team,
Teams,
testing,
testing,
timesheets,
tips,
training,
transparency,
trends,
value management,
vendors,
video,
virtual teams,
workflow
Date
Have you got your copy of the PMBOK Guide®-- Sixth Edition yet? It’s not a scintillating read, but it is worth a look, especially (and of course) if you are planning on going for a PMI certification this year. For the purposes of this article, and in line with what this blog normally looks at, today I’m going to highlight the changes in the Cost Management knowledge area.
For this I have to thank the authors of a free pdf including Asad Naveed, Varun Anand and others, as they put together a comprehensive guide to what is new in the latest version. I’ve also been pouring over the electronic version but it has definitely helped to have someone else call out where I should be looking.
So, without further ado, let’s dive into how project cost management is different now.
Plan Cost Management Process
The first process in this knowledge area is Plan Cost Management, and you won’t find much that has changed.
We are, of course, in the planning process group.
Inputs
The inputs have stayed the same, but interestingly have changed order. The Project Charter is now at the top of the list which I think makes sense. It’s produced before the project plan, so it’s more logical to have it first although in reality it won’t make any difference to how you actually do the project.
Tools and Techniques
I always thought ‘analytical techniques’ was vague, and in the Sixth Edition this has been replaced with Data Analysis.
That’s still a vague description of a technique you might use to work out and work with the costs on your project. Specifically, the text refers to using alternatives analysis, which is a lot less complicated than it sounds. I interpret this as using basic techniques you would expect to see in a business case to discuss the different alternatives for funding the project, with the objective of concluding which is going to be the best route for this piece of work.
Alternatives include:
- Funding your project from capital
- Funding with a loan i.e. debt
- Making the project self-funding
- Or some other way or raising the money to do the work.
You can also do the same ‘how shall we get the money?’ discussion for specific resources, and this is a make or buy decision. You can also consider whether to rent equipment, for example, or any other way of getting what you need.
There, that’s not so complicated, is it? And a lot more useful than the vague ‘analytical techniques’ of the previous version.
Outputs
Move along, nothing to see here!
Outputs remain the same: there’s just one and it’s the cost management plan.
Next time I’ll look at what’s new in the Estimate Costs process. A quick spoiler: I think it’s got easier and the process is more streamlined! You’ll have to let me know what you think.
Posted on: January 15, 2018 07:59 AM |
Permalink
Comments (15)
Please login or join to subscribe to this item
Thanks for sharing, Elizabeth!
For me, the following changes were the most memorable in this knowledge area:
* Dropped the use of the term PERT for Beta distributions
* Financing added as a new tool for Determine Budget process
* EVM has been broken out into EVA and Variance Analysis and lumped under Data Analysis as a tool for Control Costs
* PMIS added as a tool for Control Costs
Kiron
Excellent article Elizabeth, thanks
Thank you Elizabeth and Kiron for comparing and elaborating the updates in latest edition.
Looking forward for the remaining parts.
Anish Abraham
Privacy Program Manager| University of Washington
Auburn, Wa, United States
Great article and informative, thanks for sharing.
Rami Kaibni
Community Champion
Senior Projects Manager | Field & Marten Associates
New Westminster, British Columbia, Canada
Good Comparison Elizabeth, thanks for sharing.
@Kiron: Thanks for the additional info. I recall you shared once a video for the 6th Edition. Where can we find it ? Can you send me the link on the inbox ? Thanks a lot.
A good overview Elizabeth.
Samer Alhmdan
Senior Project Manager, PMP, PMI-RMP, LEED AP, EDGE Expert| dar
Dubai, United Arab Emirates
Thank you for the valued information!
Samer Alhmdan
Senior Project Manager, PMP, PMI-RMP, LEED AP, EDGE Expert| dar
Dubai, United Arab Emirates
Thank you for the valued information!
Thanks Elizabeth, It is nice to have quick guide for the differences between 5th and 6th Ed.
I look forward for the next post :)
Thank you! Great overview!
Jeff Ball
Senior Project Manager| Gas Liquids Engineering
Calgary, Alberta, Canada
Kevin Tukei
Project Manager, PMP, CSM
Burtonsville, Md, United States
Great great stuff! Thank you!
Nice overview. Thanks for sharing.
Please Login/Register to leave a comment.
|
"This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movements of small green pieces of paper, which is odd because on the whole it wasn't the small green pieces of paper that were unhappy."
- Douglas Adams
|
