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Every project has a budget and part of completing a project successfully is completing within the approved budget. The following elements are required in the plan
Level of accuracy: This refers to the precision level you will use to round activity estimates, level of accuracy is based on the scope and complexity of activities and the project itself.
Unit of measure: This refers to the unit of measure you will use to estimate for example resources, hours, days, week or a lump sum amount
Organization procedure links : A control account is a point where several factors such as actual cost , schedule and scope can be used to determine earned value performance measures , control account is typically associated with the work package(work package is the smallest unit in a WBS) but there could be control account established at any level of the work break down structure(WBS).The Control account is sometimes linked to the organization chart of accounts.
The most important point in Cost Management plan is that it is derived using WBS and associated Control accounts.
Estimate Cost inputs: The Inputs to the process are as follows
· Scope baseline
· Project schedule
· Human resource plan
· Risk register
· Enterprise Environmental Factors
· Organization process assets
· Tools and techniques to Estimate Costs
· Expert Judgement
· Analogous Estimating
· Parametric estimating
· Bottom up estimating
· Three point estimate
· Reserve Analysis
· Cost of quality(the total Cost to produce the product or service of the project according to quality standards.
· Project managements estimating Software
· Vendor bid Analysis
Determine Budget Tools and techniques
· Cost Aggregation(It is the process of tallying the schedule activity cost estimates at the work package level and then totalling the work package levels to higher level WBS component levels (Such as control accounts) then all the costs can be aggregated to obtain a total project Cost)
· Reserve Analysis(Unexpected issues do crop up During a project so it is better to have extra money set aside as reserve for the respective project)
· Expert Judgement( We can take the help of experts who have estimated the cost in a similar kind of project before)
· Historical Relation Ships(Analogous Estimates and Parametric Estimates can be used to determine total project costs)
· Funding Limit reconciliation(Reconciling the project expenses will require adjusting the schedule so that expenses can be smoothed)
Cost performance baselines can be displayed graphically with time increments on one axis and dollars expended on the other axis many variations of this graph exists showing dollars budgeted against dollars expended to date and so on. Cost performance baselines are displayed as an S curve.
So as to conclude project cost management is one very important aspect and critical to the project there are templates available in excel for determining Cost estimates but to make use of this templates you should have your Concepts clear.
The author is a Subject matter expert on ERP and has worked in various capacities as Implementation Manager, Project manager, Test manager, Project manager and ERP Consultant and can be contacted at sureshmenonr1009@gmail.com for queries and comments.
