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PROJECT COST MANAGEMENT – PMBOK SIXTH EDITION

PowerBi

Introduction

Project cost management is one area where the changes are very minimal. Hence all changes and highlights are summed up in one page

Trends and Emerging Practices in Project Schedule Management

Earned Schedule is one derivative of EVM that will interest to every Project Management Professional. In traditional EVM schdudle variance is calculated in monetary units using the formula
SV = EV – PV
In Earned schedule theory, the monetary value is relaced with time value and the formula is rewritte as
SV = ES – AT where AT is the duration that correspond to the data date and the ES is schedule intersection correspond to the EV data point. See the below figure.
Actual time (AT) is 7 months and the Earned Schedule (ES) is five months and hence the schedule variance is minus 2 months
And th SPI = ES/AT = 5/7 = 0.7

EVM
Where the projects are time sensitive this metric can be calculated as part of project monitoring and control.

Other changes

Plan Cost Management Plan :

Scope and Schedule baselines were the previous inputs. Now they are replaced with Schedule management plan and risk management plan:

Estimate costs

Additional techniques are added (refer table below)

INPUT

T&T

OUTPUT

Project management plan
1. Cost management plan
2. Quality management plan
3. Scope baseline

Expert judgment

Cost estimates

Project documents
1. Lessons learned register
2. Project schedule
3. Resources requirements
4. Risk register

Analogous estimating

Basis of estimates

Enterprise Environmental Factors
Organizational Process Assets

Parametric estimating

Project documents updates
1. Assumption log
2. Lessons learned register
3. Risk register

Bottom-up estimating

Three-point estimating

Data analysis
1. Alternatives analysis
2. Reserve analysis
3. Cost of quality

Project management information system

Decision making
1. Voting

Determine budget

In this process business documents are referred so that the budgets are in alignment with customer agreement and the business case. A welcome change!
In T&T part, financing is added to align the funding requirements with cash inflow commitments and constraints. This is program management feature and reflected in project budgeting.
The outputs will have some updates to schedule in the form of delayed activities and revised cost estimates.

INPUT

T&T

OUTPUT

Project Management plan:
1. Cost management plan
2. Resource management plan
3. Scope baseline

Expert judgment

Cost baseline

Project documents
1. Basis of estimates
2. Cost estimates
3. Project schedule
4. Risk register

Cost aggregation

Project funding requirements

Business documents
1. Business case
2. Benefits management plan

Data analysis
1. Reserve analysis

Project documents updates
1. Cost estimates
2. Project schedule
3. Risk register

Agreements

Historical information review

EEF & OPA

Funding limit reconciliation

Financing

Control costs

Minor changes. Performance Measurement baseline is added a fourth baseline in the sixth edition. The same has been echoed here.
[table id=25 /]
Variance analysis and trend analysis are commonly used in cost control. Hence they have been added. The OPA updates is removed as lessons learned, assumptions are recorded in separate documents

Summary / Conclusion

For those who are trained in 5th edition and looking forward to writing exam on sixth edition, this area is easy to adopt.

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