The term baseline in project management is typically used with a modifier of some sorts. The projects baseline costs are derived from the project needs as defined in these documents. Determines the cost baseline against which project performance can be monitored and controlled. Pmp pmbok 5th edition chapter7 project cost management 27,1 views. Monitor the status of the project to update the project costs and manages the changes to the cost baseline. In order to verify the print run of your book or pdf, refer to the bottom of the page which precedes the notice page and table of contents.
The project baseline a project management definition. At completion the bac represents the revised cost baseline for the project. A guide to the project management body of knowledge pmbok. Like variances, indexes also let you analyze the health of the project. Pmbok chapter 7 project cost management flashcards. It should contain everything that the customer needs, as. This blog post is the fourth blog post in a series of seven on earned value management and project forecasting. It assumes both a negative cost performance to date, and a requirement to meet a firm schedule commitment by the project. Each of the triple constraints time, cost, scope have a baseline, which is established as part of the overall project management plan. Analyzing performance of similar projects over time examining project performance over time calculating earned. Subtracting budget at completion from earned value d.
Start studying pmbok chapter 7 project cost management. Created during the project planning phase, the cost management plan is a document that defines how you manage, control, and communicate a projects costs in order to complete the project on budget. A cost baseline is a timephased budget that project managers use to measure and monitor cost performance use cost estimates for major activities to create cost budgeting may result in updates to the cost management plan monitor and controlling 43. 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. The cost baseline is the approved project budget, but excludes management reserves. In the earned value management evm technique, the cost performance baseline is known as performance measurement baseline pmb. Pmp pmbok 5th edition chapter7 project cost management. It is a technique that requires the formation of an integrated baseline to measure performance of the. Performance measurement baseline contract time phased budget plan. Your performance measurement would only be meaningful if you had an accurate baseline.
As the cost baseline is baselined and managed under configuration management, changes to the cost baseline must undergo proper change management processes. Free cost management plan templates project management docs. Management reserves, contingency reserves, cost baseline and budget duration. Project cost management for project managers based on pmbok by dr. Among other things, a cost management plan identifies the individual or group responsible. What is the difference between cost estimates and budget.
Sv, cost performance index cpi, and schedule performance index spi calculate forecasts of performance using earned value algorithms such as estimate at completion eac and estimate to completion etc controlling cost and schedule performance. Pmbok 6th edition pdf download for pmp certification. The intent is to inspire an appreciation for the earned value concept and emphasize how performance measurement techniques can be a valuable management tool. The cost management plan guides these four processes. In regards to money and remaining in business, providing a budget that is adjusted to time is considered a cost baseline. Management reserves are not part of the cost baselines but they are part of the project funding requirements. Schedule performance index spi and cost performance.
Assignment of authority and responsibility at the work performance level integration of the cost, schedule, and technical aspects of the work into a detailed baseline plan objective measurement of progress at the work performance level with evm metrics accumulation and assignment of actual direct and indirect costs. 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. Question 208 changed choice d to read source selection analysis question 250 changed choice b to threepoint estimating. Study flashcards on pmbok chapter 7 project cost management at. Pmbok pdf is one of the most frequently searched queries by pmp aspirants.
If you continue browsing the site, you agree to the use of cookies on this website. Pmbok guide sixth ed pdf is available for download free of cost for pmi members. Cost baseline is the authorized timephased spending plan for the project on which the project cost performance is to be measured against. Cost aggregation the process of rolling up individual activity costs into work packages and work packages into control accounts. They help you analyze the efficiency of schedule performance and cost performance of the project. Now these three baselines put together is known as the performance measurement baseline. Expected cash flow cumulative values cost baseline. Today we are going to discuss schedule performance index spi and cost performance index cpi.
Pmbok edition 5 pmp exam prep chapter 4 project integration management project management body of knowledge. Planning package farterm ca activities not yet defined into wps. Creating budget or cost baseline for projects rationalplan. Hence, good project management requires a firm grasp on the concepts and techniques in project budgeting and cost control.
Cost controlling managing and controlling factors that change or affect the budget. The cost baseline will be used to measure and monitor cost performance of the project. For more information, see performance measurement baseline. Download pmbok guide 6th edition pdf free for pmi members. The triple constraints time, cost and scope each have a baseline which is a part of the project management plan. Pmp practice exam chapter7 project cost management questions. The cost baseline has all of the following characteristics except. The budget should take into account all stages of the project life cycle. 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. Summary level planning package farterm activities not yet defined into cas.
Project cost management for project managers based on. Cost budgeting collecting the cost estimates, combining them to develop an overall cost and baseline. The second process involved with pmbok cost management strategies is cost budgeting. It includes activity costs plus contingency reserves, work package costs plus contingency reserves, and management. 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. A projects baseline is defined as the original scope, cost and schedule. We chose to create cost accounts at the fourth level of the wbs as an example since many project management offices dont have a project management information system. Some examples of this are cost baseline, performance measurement baseline, and technical baseline. Cost control is the part of project management such that cost management processes involved in planning, estimating, budgeting, and controlling costs so that the budget can be completed within the. A timephased plan for when funds will be disbursed on a project, baseline against which measuring project cost performance. Project budgets constitute all the funds authorized to execute the project. Learn vocabulary, terms, and more with flashcards, games, and other study tools. The project manager relies upon the data she has gathered from estimates to set up a realistic project budget.
The above estimated costs established during the planning phase might not be estimated. This article provides an introduction to the basic concepts of earned value management evm, from initial project planning through execution including data analysis techniques and baseline revisions. A guide to the project management body of knowledge. 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 is used as a example in which cost performance is measured and monitored to gauge the importance of said project. Track the performance of team members, providing feedback, resolving issues and managing. Thankfully, the project management body of knowledge pmbok gives us a. Ofcourse all of this is done during the planning phase.
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 controlled. Ultimately, project management includes a variety of responsibilities within ones team in order to achieve maximum results for their employer. But many factors can affect the cost performance of a project. Schedule performance index spi and cost performance index cpi are earned value management evm measures for project schedule and cost efficiency in project management, and used to assess the magnitude of variation from the established schedule and cost baselines.
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