Projects Cost Management, Estimating, Budgeting and Control.

Learn how to estimate costs for any project, how to determine budget and how to use Earned Value Management tools. 2 PDU

Description

This course consists of two main parts.
The first part is a theoretical explanation based on the Cost Management chapter from the PMBOK Guide (the standard reference used in preparing for the PMP certification).
The second part is a practical example, where we apply the theoretical knowledge to a real case step by step.

Both parts cover three core areas of Project Cost Management:

1. Estimating Costs for Project Activities

This topic focuses on how to predict the costs associated with individual project activities. It includes:

• Types of Costs – distinguishing between direct, indirect, fixed, variable, and overhead costs.

• Estimating Costs Tools and Techniques – such as analogous estimating, parametric estimating, bottom-up estimating, and three-point estimating.

• Handling Risk Reserves Costs – including contingency reserves for known risks and management reserves for unknown risks.

• Cost of Quality (CoQ) – understanding how prevention, appraisal, and failure costs affect the overall budget.

• Documenting the Basis of Estimates – ensuring transparency by recording assumptions, constraints, methods used, and confidence levels for each estimate.

2. Determining the Project Budget

This part consolidates the cost estimates into an overall budget for the project. It includes:

• Developing the Cost Baseline – creating a time-phased budget that serves as a reference for measuring performance.

• Estimating Funding Requirements – determining how much money is needed and when it will be required during the project life cycle.

• Finalizing the Project Budget – integrating all elements, including reserves, and gaining approval from stakeholders or sponsors.

3. Controlling Project Costs

The final part focuses on tracking, reviewing, and regulating project costs to keep them within the approved budget. It includes:

• Using Earned Value Management (EVM) – a powerful technique that integrates cost, schedule, and scope to assess project performance.

• Calculating Key Indicators – such as:

  • Cost Performance Index (CPI) – efficiency of budget usage

  • Schedule Performance Index (SPI) – efficiency of time usage

  • Cost Variance (CV) – difference between earned value and actual cost

  • Schedule Variance (SV) – difference between earned value and planned value

• Forecasting Project Costs – predicting future cost performance using different EVM-based scenarios (CPI = 1, CPI = Current, CPI & SPI = Current).

• Taking Corrective Actions – applying adjustments when variances occur to bring the project back on track.

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