Project Cost Management

Project cost management includes various processes of planning, estimating, budgeting, financing, financing, management and control costs for the project to be completed within the approved budget, this ensures that the project is completed within the approved budget.

Project cost management knowledge management includes four processes: Planning cost management, estimating costs, budgeting, and controlling costs.

I. Planning Cost Management

Planning cost management is the process of formulating policies, procedures, and documents for planning, managing, spending, and controlling project costs. The main role of this process is to provide guidance and directions for managing project costs throughout the project.

Planning Cost Management: inputs, tools and technologies and outputs

Plan the data flow chart of Cost Management

Ii. estimate costs

The estimated cost is an approximate estimation of the funds required to complete the project activities. The main role of this process is to determine the amount of cost required to complete the project.

Estimated costs: input, tools, technology, and output

Data Flow chart for estimating costs

2.1 reserve Analysis

To address the uncertainty of costs, the cost estimation may include emergency reserves (sometimes referred to as "emergency costs "). An emergency reserve is a part of the budget included in the cost benchmark to respond to accepted identified risks and identified risks that have formulated emergency or mitigation measures. Emergency reserves are usually part of the budget to address the "known-unknown" risks that affect the project.

2.2 Activity Cost Estimation

Activity Cost Estimation is a quantitative estimation of the costs that may be required to complete the project. The cost estimation can be summarized or detailed. Cost Estimation should cover all resources used by the activity, including (but not limited to) direct labor, materials, equipment, services, facilities, information technology, and some special cost types, such as financing costs (including interest), inflation subsidies, exchange rates or cost emergency reserves. If indirect costs are included in project estimates, you can calculate indirect costs at the activity level or higher level.

3. Budgeting

Budgeting is a process that summarizes the estimated costs of all individual activities or work packages and establishes an approved cost benchmark. The main role of this process is to determine the cost benchmark and monitor and control project performance accordingly.

Budgeting: input, tools, technology, and output

Budget data flow chart

3.1 balance in capital restrictions

Balance capital expenditures based on any restrictions on project funds. If the difference between the capital limit and planned expenditure is found, you may need to adjust the progress plan of the work to balance the Fund expenditure level. This can be done by adding a forced date to the project schedule.

Iv. Cost Control

Controlling costs is the process of monitoring the project status to update the project cost and manage the baseline change of costs. The main role of this process is to identify the differences between the actual and the plan in order to take corrective measures to reduce risks.

Control Costs: input, tools, technology, and output

Data Flow chart for controlling costs

Project Cost Management