Some examples of this are cost baseline, performance measurement baseline, and technical baseline. Ofcourse all of this is done during the planning phase. Project cost management pmbok 5th edition slideshare. Get access to 16,000 woodworking plans, download 50 free plans. A timephased plan for when funds will be disbursed on a project, baseline against which measuring project cost performance. The triple constraints time, cost and scope each have a baseline which is a part of the project management plan.
Since this is the basis for our performance measurement system, we must be careful that the budget is shown on the cost baseline at the same point in time where we expect the actual cost to occur. 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. The cost baseline is developed during which process. Control costs is achieved with reference to the cost. This paper develops a 3d project integration model for pmbok comprising core constraints of. If you are managing changes to the projects cost baseline, which process are you.
The approved version of a work product that can be changed using formal change control procedures and is used as the basis for comparison to actual results. Variance analyses can be performed by comparing planned activity cost against actual activity cost to identify variances between the cost baseline and actual project performance. Reprinted from a guide to the project management body of knowledge pmbok guide, 5th edition by project management institute, 20, p. Connoisseur solutions determine budget outputs cost performance baseline is an authorized. This cost baseline is created by estimating the costs by the particular period that the project would be completed.
The above estimated costs established during the planning phase might not be estimated. Pmp pmbok 5th edition chapter7 project cost management 27,217 views. It includes activity costs plus contingency reserves, work package costs plus contingency reserves, and management. There are three different baselines that are commonly addressed in most, if not all, project management practices. A measure of the cost performance that must be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstading work to the budget available. But theres little your project sponsor, your client, or their finance director care about more than your budget and how closely you can stick to it. Overview of project management knowledge areas and project management processes 8 figure 12. The key benefit of this process is that it determines the cost baseline against which project performance can be monitored and controlled. To manage your project costs effectively, there are three key processes you need to be able to perform.
These baselines refer to the key points of the project which include schedule, cost, and scope. The term baseline in project management is typically used with a modifier of some sorts. See also cost baseline, performance measurement baseline. As the cost baseline is baselined and managed under configuration management, changes to the cost baseline must undergo proper change management processes. Cost baseline is the authorized timephased spending plan for the project on which the project cost performance is to be measured against. All the minor budgets are added together to create the overall cost performance baseline, which is displayed as a graph of cumulative funds to be spent over.
Determine budget determine budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. What is a baseline in project management project baseline. Schedule performance index spi and cost performance index cpi are earned value management. Study flashcards on pmbok chapter 7 project cost management at. Cost baseline is the authorized timephased spending plan for the project on which the project cost performance is to be. Pmbok standards ncampo 20 conference winstonsalem, nc may 15 17, 20 majed al ghandour, ph. This term is defined in the 3rd, 4th and 5th edition of the pmbok.
In regards to money and remaining in business, providing a budget that is adjusted to time is considered a cost baseline. It feels complicated and has the mystical air of mathematical magic and wizardry. Pmbok guide sixth ed pdf is available for download free of cost for pmi members. Project management body of knowledge 2000 edition caricom. But many factors can affect the cost performance of a project. The value of total planned work, the project cost baseline. The cost performance baseline is an authorized timephased budgetatcompletion bac used to measure, monitor, and control overall cost performance on the project pmis fourth edition pmbok. It provides details on how to plan, manage and control the project cost in relation to the cost baseline and manage the cost variances. This project management plan template is a good starting point for planning your project. Ultimately, project management includes a variety of responsibilities within ones team in order to achieve maximum results for their employer. All the minor budgets are added together to create the overall cost performance baseline, which is displayed as a graph of cumulative funds to be spent over time. See also cost baseline, performance measurement baseline, schedule baseline, and scope baseline.
Further analysis can be performed to determine the cause and degree of variance relative to the schedule baseline and any corrective or preventative actions needed. It is a fixed reference point to measure and compare your projects progress against. The cost performance baseline, also called the performance measurement baseline pmb, is one of the project baselines that are incorporated into the project management plan. Determine budget overview determine budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline. T d jainendrakumar the cost management includes the processes involved in estimating, budgeting, and controlling costs so that the project can be completed within the approved budget. This course was designed as a supplemental study guide for the major content areas of chapter 8 of a guide to the project management body of knowledge pmbok guide, fourth edition. Each of the triple constraints time, cost, scope have a baseline, which is established as part of the overall project management plan. Any changes to the cost baseline must be approved by the change control board. Monitoring and controlling process group cost mgmt knowledge area.
Now these three baselines put together is known as the performance measurement baseline. This is used as a example in which cost performance is measured and monitored to gauge the importance of said project. Creating budget or cost baseline for projects rationalplan. In this course, you will learn how the project management team ensures that a project is completed at the level of quality required by all the stakeholders. This allows you to assess the performance of your project over time. The cost baseline template is a time phased budget template that will be used to measure and monitor cost performance on the project.
Project cost management pmp certification training. The project management body of knowledge includes proven traditional practices that are widely applied as well as innovative practices that are emerging in the profession. The process of monitoring the status of the project to update the project costs and managing changes to the cost baseline. Download pmbok guide 6th edition pdf free for pmi members. Suppose we show the budgeted expenditure for an item we are purchasing. It is developed in the pmboks determine budget process which adds up the estimated costs of the project activities in order to create the budget. Project cost management the essential things to know and do. The inputs tools and techniques and outputs for this process are listed in.
A baseline in project management is a clearly defined starting point for your project plan. For example, lets say your project is on target to finish in six weeks. It includes activities and tools to help you complete your project within the approved budget. A baseline project plan incorporates performance measurement baselines to the processes of project planning and action implementation. Earned value wbs to performance measurement baseline. Monitoring cost performance and understanding the root causes of. A set of navigation buttons is provided on the first page of the pmbok guide. Hence, good project management requires a firm grasp on the concepts and techniques in project budgeting and cost control thankfully, the project management body of knowledge pmbok gives us a strong foundation in this area project cost management is the fourth of 10 project management knowledge areas. See also cost baseline, performance measurement baseline, schedule baseline, and. It helps to identify deviation to the project planned costs and possible corrective action to minimize threats or capitalize on opportunities. Project cost management makes a clear distinction between. Posted on april 29, 20 by jerome rowley after chapter 6, which discusses time management, the next knowledge area in chapter 7 covers the last of the three major triple constraints, that of cost, and the purpose of this knowledge area is so that the project can be. At the beginning of the pmp exam, use your scratch paper to download all of. Pmbok chapter 7 project cost management flashcards.
This is done during the planning process, and records what the project had planned, scheduled, budgeted for, in terms of the schedule, scope and cost. Development of generic key performance indicators for pmbok. The control costs process monitors project progression and update costs while managing changes to the project cost baseline. For more information, see performance measurement baseline. A guide to the project management body of knowledge pmbok. It is a technique that requires the formation of an integrated baseline to measure performance of the. Watch the complete video to see what is included in this process to create a cost baseline against which project performance can be monitored and. A successful project requires a detailed and wellplanned project management plan. The focus of this process is to recognize deviations to the project planned expenditures or budget baseline as soon as practicable so.
Pmp pmbok 5th edition chapter7 project cost management. The cost baseline tells you how much you should have spent at any given point in time. Poor project cost management is one of the easiest ways to make a project go awry. The pmbok guide specifies the use of project baselines. Project cost management for project managers based on. The process of monitoring the status of the project to update project costs and managing changes to he cost baseline.
In the earned value management evm technique, the cost performance baseline is known as performance measurement baseline pmb. According to pmbok the cost baseline is a timephased budget that is used as a basis against which to measure, monitor, and control overall cost performance on the project. Pmbok 6th edition pdf download for pmp certification. It should contain everything that the customer needs, as. The project cost management processes are focused on the cost of the project resources used. A guide to the project management body of knowledge. Project cost management for project managers based on pmbok by dr. This cost estimation is usually illustrated in a scurve. Project cost management is one of the most important aspects of project management that you need to master. Earned value ev has grown in popularity over the last several years.