Subtitles of the Movie

In this movie, you will receive an overview of the project cost management knowledge area, our first knowledge area of focus of this course. You will often hear that cost is one of the toughest knowledge areas to digest, and what's ironic is that it contains only three processes. What makes it challenging is the fact that it contains formulas to memorize and that there is a lot to consider when determining cost and I mentioned earlier that this course will help you master these formulas, making this one of the easiest knowledge areas to grasp. The purpose of this knowledge area is very clear cut and straight forward, to complete the project on budget. Of course, completing the project within the budget is not an easy undertaking and requires that the project team conduct planning, estimating, budgeting, and then controlling of the project cost. There are a few things that this knowledge area is concerned with, this includes the cost of resources needed to complete the project activities. As you may recall, the scheduled activities were determined in the time knowledge areas. We are now taking those activities and determining the cost for each. This knowledge area is also concerned with the effects of project decisions on cost and also considering the information requirements of stake holders. Once again you can really see the proactive level and the planning efforts that are required by the project team to achieve good project management, and in this case relating to cost. Some additional notes on the cost knowledge area include that the cost management plan is developed during the project management planning efforts, this is the reason that you will see updates made to the cost management plan as an output in the first process, but not necessarily the creation of the cost management plan. Cost estimating and cost budgeting may be completed as a single process, we came across this in the time knowledge area as well, where two processes within the PMBOK Guide are usually completed at the same time in practice. They are shown as two distinct processes in the PMBOK guide for instructional purposes and for clarification since they utilize different tools and techniques. And the final note before introducing the processes is that influence to cost is greatest at the beginning of the project, however, the impact of changes on cost is greatest at the end, meaning the changes normally result in higher cost as the project progresses. Let's take a look at the three cost related processes. The first is cost estimating, where an estimate of the cost of resources needed is determined for all project activities. The second process is cost budgeting, in this process the estimated cost are aggregated to establish a cost baseline. And the third process is cost control, where factors that create cost variances are influenced and changes to the project budget are controlled. As always, it's important that you not just know the knowledge areas that these processes belong to, but also the process group. As you may have imagined, cost estimating and cost budgeting both belong to the planning process group while cost control belongs to the monitoring and controlling process group. And that brings our overview of the project cost management knowledge area to a close. In the next movie, we'll look at the process flow of this knowledge area and also, how the processes interact with the processes outside of this knowledge area.