Money. Cash. Greenbacks. Dead presidents. It’s all the same thing when you get down to it: Projects require finances to get from start to completion, and it’s often the project manager’s job to estimate, control, and account for the finances a project demands. Projects consume the project budget during execution, when all of those project management plans we’ve discussed are put into action, and the project budget is monitored and controlled during, well, the monitoring and controlling processes.
What’s that you say? You don’t have any control over the monies your project requires? Management gives you a predetermined budget, and it’s up to you to make it all work out? Yikes! While this book centers on your Certified Associate in Project Management (CAPM) and Project Management Professional (PMP) examinations, that’s always one of the scariest things I hear. Or is it? If management’s decision is based on previous projects, business analysts’ research, or should-cost estimates from experts, then it’s not so scary. I’ll give you this much: A predetermined project budget is always a constraint, and it’s rarely fun for the project manager.
And what about those projects that don’t have any monies assigned to the project work? You know… the projects where the project scope is completed just by the project team’s work, and there really aren’t any materials or items to purchase. That’s okay—there are still costs associated with the project, because someone, somewhere, is paying for the project team’s time. Salaries can also be considered a project cost. After all, time is money.
In this short overview I'll discuss all of the elements that you'll learning in this course. It's a great place to set expectations and pave the way for a successful course. As always, if you've questions about the course, please add them to the course conversation.
You need a plan just for project costs. You need a plan that will help you define what policies you and the project team have to adhere to in regard to costs, a plan that documents how you get to spend project money, and a plan for how cost management will happen throughout your entire project. Well, you’re in luck! This plan, a subsidiary plan of the project management plan, is the project cost management plan. You'll need to understand all about the project's cost management plan for your PMP exam. This lecture covers:
Assuming that the project manager and the project team are working together to create the cost estimates, there are many inputs to the cost-estimating process. For your PMI exam, it would behoove you to be familiar with these inputs because these are often the supporting details for the cost estimate the project management team creates. Cost estimating uses several tools and techniques. You'll learn in this module:
Now that the project estimate has been created, it’s time to create the official cost budget. Cost budgeting is really cost aggregation, which means the project manager will be assigning specific dollar amounts for each of the scheduled activities or, more likely, for each of the work packages in the WBS. The aggregation of the work package cost equates to the summary budget for the entire project. There is a difference between what was estimated and what's actually being spent on the project. This lecture defines:
Once a project has been funded, it’s up to the project manager and the project team to work effectively and efficiently to control costs. This means doing the work right the first time. It also means, and this is tricky, avoiding scope creep and undocumented changes, as well as getting rid of any non-value-added activities. Basically, if the project team is adding components or features that aren’t called for in the project, they’re wasting time and money.
Cost control focuses on controlling the ability of costs to change and on how the project management team may allow or prevent cost changes from happening. When a change does occur, the project manager must document the change and the reason why it occurred and, if necessary, create a variance report. Cost control is concerned with understanding why the cost variances, both good and bad, have occurred. The “why” behind the variances allows the project manager to make appropriate decisions on future project actions. Managing cost control is an ongoing activity within a project. This lecture defines cost control, including earned value management. You'll learn:
This seminar exam will test your comprehension of the topics covered in the module. Take this practice test over and over until you can complete the exam with a perfect score. If you've questions about this practice tests add them to the discussion and I'll help.
Joseph Phillips has more than 15 years’ experience as a project management consultant, educator, technology consultant, business owner, and technical writer. He has consulted as a project manager for a range of businesses, including startups, hospitals, architectural firms, and manufacturers. Joseph is passionate about helping students pass the PMP certification exam. He has created and led both in-person and web-based seminars on project management, PMP certification, IT project management, program management, writing, business analysis, technical writing, and related topics. Joseph has written, co-authored, or served as technical editor to more than 35 books on technology, careers, project management, and goal setting for MacMillan, McGraw-Hill, Pearson Education, and AMA Press.
Project Management Professional (PMP)
PMI-Agile Certified Practitioner (PMI-ACP)
CompTIA Project+ Professional
CompTIA Certified Technical Trainer+
PMP Project Management Professional Study Guide, McGraw-Hill
CAPM/PMP All-in-One Exam Guide, McGraw-Hill
PMP Project Management Lab Book, McGraw-Hill
The Certified Technical Trainer All-in-One Exam Guide, McGraw-Hill
IT Project Management: On Track from Start to Finish, McGraw-Hill
Project Management for Small Business, American Management Association
Software Project Management for Dummies, For Dummies Publisher
The Lifelong Project, Amazon CreateSpace
Vampire Management: Why Your Job Sucks, Amazon CreateSpace