Project Cost Management (by Process Groups) — PMBOK® Guide, 6th Edition Update
Click here for a detailed analysis of each project management process group and knowledge area.
Control Costs 101
What Does Control Costs Involve and When Do You Perform It in a Project Life Cycle?
- WHAT Control Costs Is. Control Costs implies monitoring the project budget and managing variations to the cost baseline included in the project plan.
- WHY Control Costs Is Important. The Control Cost process gives a project manager the tools and techniques to measure the performance of the project at a given point in time and to forecast the future performance of the project.
- WHEN Control Costs Is Executed. A project manager performs Control Costs process regularly throughout the project. Its iterative nature emerges especially when project costs start to increase.
- HOW Control Costs Operates.
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Source: PMBOK® Guide, 6th ed., Chapter 7, section 7.4, p. 257.
Control Costs Key Terms
What Are the Key Terms to Fully Understand the Process of Controlling Costs?
- Actual Cost (AC). The actual direct and indirect costs incurred in completing project work during a given period.
- Budget at Completion (BAC). The original total project budget to complete all the work.
- Earned Value Management. A management methodology for integrating scope, schedule and resources and for objectively measuring project performance and progress.
- Cost Performance Index (CPI). A relative measure of project’s cost efficiency calculated by dividing earned value by actual cost.
- Cost Variance (CV). A measure of variance between what was planned on spending and what is actually spent, expressed as earned value minus actual cost.
- Estimate at Completion (EAC). The forecasted cost estimate of completing all of the project work, based on performance to date.
- Forecasting. A technique that takes time and cost performance to date and uses this information to estimates the future conditions or future performance of the project based on what a project manager knows when the calculation is performed.
- Planned Value (PV). The value of work that should have been completed on the project at a given point in the schedule.
- To-Complete Performance Index (TCPI). The projected cost performance the remaining work of the project must achieve in order to meet the original budget or a new approved one.
Control Costs Tips
What Are the Best Tips to Answer Correctly the PMP Cerification Exam Questions on Control Costs Process?
- Calculators. PMI® allows the use of business calculators with standard six-function (+, −, ×, ÷, √, %).
- Earned Value Management Formula. We have designed a handy all-in-one cheat sheet visualizing critical formula and their parent-to-child relationships from the earned value management (EVM) system. Click here to read more.
Click here for a detailed analysis of each project management process group and knowledge area.
SOURCES: Project Management Institute (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). 6th ed. Newtown Square: Project Management Institute.
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