Subtitles of the Movie

In this movie, we'll take a look at the Project Cost Management Knowledge Area and cover a brief summary review of the knowledge area as a whole. This knowledge area includes 3 processes, cost estimating, cost budgeting and cost control which spans planning through monitoring and controlling process groups. The knowledge area overall is concerned with completing the project on budget, it involves the planning, estimating, budgeting and controlling of project costs. In addition to an overview of the knowledge area we'll also go through a review of the process flow. Understanding the process flow is important to understanding how the processes within a knowledge area function together and also how they interact with processes outside of the knowledge area. It's not enough to study processes individually if you don't understand the bigger picture. In the process overview we see the cost knowledge area begins by estimating activity costs which was necessary in order to carry through the next process cost budgeting. Cost budgeting then resulted in the cost baseline. The third process cost control monitored and controlled the cost variances. Let's take a look at a snapshot of the 3 processes. The cost estimating process develops the cost estimates of the resources needed for each scheduled activity. It not only estimates these costs but also considers the alternative ways of reducing costs and considers life cycle costing. There are several ways to estimating costs, whether there's limited to detailed information provided. In this process, we reviewed estimating techniques such as analgesic estimating which is based on expert judgment, parametric estimating which is based on mathematical models combined with historical data and bottom up estimating where estimates are ruled up to higher levels within the WBS. This results in activity cost estimates along with supporting detail that includes a description of the schedule activity work, documentation supporting how these estimates were derived along with documented assumptions made and estimate ranges. The next process cost budgeting is where the cost baseline is generated; the baseline is created by aggregating estimated cost of activities or work packages. This process also measures project performance, once again we utilize parametric estimating when possible along with reserve analysis, cost aggregation and funding limit reconciliation which looks to make sure that expenditure of funds are reconciled to occur within set limits. The baseline is important because it's used to measure, monitor and control the overall cost performance of the project. And the final process cost control is responsible for influencing the factors that create cost variance within the project and controls changes made to the project budget. Any cost overruns are monitored and brought within acceptable limits, there's a great deal of analysis that takes place in this process, particularly performance measurement analysis which utilizes earned value technique and forecasting. These calculations are made as a way of keeping a close eye on cost performance and determining ways of bringing it inline with the cost management plan. You should be familiar with calculating cost variance, schedule variance, cost performance index, schedule performance index, estimate at completion, estimate to complete and variance at completion. Cost control was the final process to review which concludes the review of the Project Cost Management Knowledge Area. As a final tip on cost be sure to memorize the cost related formulas and understand what it is that you're calculating.