What’s New in Project Cost Management (pt 2)
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.
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Date
What’s new in Project Cost Management: Plan Cost Management Process – read the first part of this series here.
In the last article I looked at what was different about Plan Cost Management, now that the PMBOK Guide®-- Sixth Edition is out and available. Today, I want to look at what’s different in the next process: Estimate Costs.
Estimate Costs Process
The second process in this knowledge area is Estimate Costs, and it looks a little bit different in the new version. There’s nothing amazing that is going to throw you for six, but the process does feel simpler and more streamlined. It’s just more logical. That’s a good thing!
We are still in the planning process group.
Inputs
The inputs have been updated and streamlined. Previously the inputs included the cost management plan, the human resource management plan and some specific documents. Now, the inputs are simply ‘project management plan’ and ‘project documents’.
You could say that this vague, but it’s more in line with other processes and knowledge areas that have been updated, and it’s more rounded. You could, for example, argue that other bits of the project management plan are important, not just those mentioned in the previous version. In fact, the guidance in the PMBOK® Guide does go on to say that the quality management plan plays a part.
Project documents is also explained to include the lessons learned register (which is popping up everywhere – also a good thing) and resource requirements. I like this new vague approach because it means you could even argue that things like the communications management plan and stakeholder management plan have a role to play – they aren’t mentioned in the PMBOK® Guide but in real life you’d want to incorporate the costs of stakeholder engagement activities and a cross-check against that plan would be helpful during your project budgeting.
Tools and Techniques
Tools and Techniques have had a revamp too. There are 3 new T&T:
Data analysis (alternatives analysis, reserve analysis and cost of quality – these last two used to be called out as inputs in their own right and now they are bundled up)
Project Management Information System (again this seems to be popping up all over the place, and is explained to mean spreadsheets, statistical analysis and simulation software (does anyone outside of large government/public sector projects actually use this?). This replaces the old ‘project management software’.
Decision making e.g. voting. I love how some of the ‘tools and techniques’ read more like leadership qualities or competences, but yes: you can use decision making to help with defining your estimates.
Vendor bid analysis and group decision making techniques have dropped out, but would be bundled into decision making.
Outputs
There’s a tiny change here: Activity cost estimates becomes plain old Cost estimates.
Aside from that, there’s nothing else different about the outputs. You still get out the estimates themselves, the documentation that sets out the basis of estimates and you update some documents as required.
Next time I’ll look at what’s new in the Determine Budget process. This has had quite a few updates, although they make the process easier to understand and easier to tailor, in my view. More on this next time!
Posted on: January 23, 2018 07:59 AM |
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Comments (7)
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Jose Harris
Chief Executive Officer| Space Environment and Atmosphere Solutions, LLC
Alexandria, Va, United States
Thank you for this article, Elizabeth. It is enlightening.
While vagueness has its place, there is sometimes a need to be specific. Are all Project Documents needed as inputs to the cost management plan, or are there specific documents that would generally be needed, though not necessarily always? Part of the need for a PMBOK standard is to ensure that we cover certain bases in general and not leave everything "open to interpretation." Omission of items that tend to be optional or generally not needed (or are they?) is not a sound reason for overgeneralizing.
The T&T and Outputs, on the other hand, make good sense to this practitioner.
Best regards,
Jose
I'm fan of these "What's new..?" entries. Thank you!
Definitely a better update in the 6th edition.
Aaron Wolf
Manager| Army Combat Engineer
Clarksville, Tn, United States
Jeff Ball
Senior Project Manager| Gas Liquids Engineering
Calgary, Alberta, Canada
I really like the graphics showing between the editions very helpful to understand
Anish Abraham
Privacy Program Manager| University of Washington
Auburn, Wa, United States
Thanks for sharing this, Elizabeth.
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