Skip to main content

What Is Project Cost Management?

?

Thorough project management knowledge, skills and techniques are necessary for the successful execution of a project from iniatiation to closing. 

One of the tools for a successful  project execution is an effective project cost management.knowledge.

Project Cost Management includes necessary techniques or processes for the completion of projects within approved budget.

These processes are estimation of costs, determination of budget and control of costs.



1. Estimation of costs -

The establishment of monetary resources required to successfully complete a project is crucial.

Some of the techniques used to estimate costs include 

a. parametric estimating - the parametric cost estimates are calculated by using the relationship between historical data and other variables such as cost, budget and duration.

b. reserve analysis - cost estimates sometimes include reserve analysis- this analysis is relevant to cost estimates that contain cost uncertainty. 

The uncertainty is accounted for by including contingency reserves or allowances in cost estimates.

Contingency reserves are often required as part of funding requirements.

c. analogous estimating - this techilnique uses values obtained from scope, measures of scale, budget and duration. The technique relies on historical costs of similar projects done in the past, to make estimates for a current project.

There are other tools such as expert judgement and the bottom up estimating 

2. Determination of Budget.

Budget determination  is a process that aggregates cost estimates of activities to establish an approved baseline. 

The established baseline would include authorized budgets (standards for assessing project cost performance) and exclude reserves made by management.

Some of the tools used to determine project budgets are expert judgement and budget reserve analysis.

a. Expert judgement is made on the basis of expertise in industry, knowledge of the project area and relevant experience.

b. Budget reserve analysis is used to establish both managment and contingency  reserves for a project. 

Contingency reserves as pointed earlier, are necessary because sometimes during project execution, some unplanned changes may become necessary. 

3. Cost control.

This is the process of monitoring a project, updating the budget when it's necessary and managing changes to baseline.

Some of the techniques used are forecasting, performance reviews, Earned Value Management and variance analysis and To-Complete Performance Index (TCPI).


Comments

Popular posts from this blog

9 High yield savings accounts in Nigeria.

High yield savings account in Nigeria Here are nine Nigerian banks known for offering high-yield savings accounts, as of the latest available data.  The interest rates can vary, so it’s always a good idea to check with the banks directly for the most up-to-date offers. 1. GTBank (Guaranty Trust Bank)    Known for competitive interest rates on savings accounts, including specialized savings products like the GTSave savings account. The GTSave offers a competitive interest rates at 8.175%. 2. Access Bank     Offers a variety of savings products with attractive interest rates, especially on their Access Bank High Interest Savings account. Access bank premier savings accounts attracts interest rate of  8.175%p.a paid monthly. 3. Zenith Bank    Provides various savings products with good returns, including the Zenith Bank High Yield Savings account. Zenith bank has an account called Save4Me. Save4Me  is a savings account with a higher interes...

24 Exchange gets set to offer 23-hour trading in 2025.

Security exchange. In a press release on November 27, 2024, 24 Exchange announced it has received approval from the U.S. Securities and Exchange Commission to operate 24X National Exchange as the first national securities exchange in the U.S. that allows trading of U.S. securities 23 hours each workday. The extended hour trading is subject to Equity Data Plans making changes that would facilitate overnight trading hours and 24X National Exchange making an additional rule filing with the SEC confirming the changes and the Exchange's ability to comply with the Securities Exchange Act. 24 Exchange CEO and Founder Dmitri Galinov said: "The SEC's approval of our new exchange is a thrilling development that the 24X Team has been working toward for many years. Traders are most at-risk when the market is closed in their geographic location. 24X National Exchange will seek to alleviate this problem by facilitating around-the-clock U.S. equities trading for broker-dealers and their...

Which primary effective spending habits guarantee personal budget discipline?

First, why is personal budget discipline necessary?  It's necessary because without it, you're going spend more than you earn and end up living the rest of your life in debt. Spending one's entire life in debt doesn't produce growth. Personal finance growth is founded on having substantial savings, which could form a significant portion of initial investment capital.  Investments drive personal growth.  So to grow financially, personal budget discipline is necessary. However personal budget discipline can't be obtained in the absence of effective spending habits. What are the effective spending habits that guarantee personal budget discipline? 1. Having the habit of preparing a personal budget regualrly. Having a personal budget is the starting point and the driver of effective spending habits. A personal budget is a financial plan that clearly defines your expected revenue and expected expenses. For a personal budget to be effective, it must be realistic. That is, ...