Managing Project Costs

In this chapter, you will

♦ Estimate the project costs

♦ Administer the project budget

♦ Manage project cost control

♦ Work with earned value management


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 pre-determined 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 pre-determined 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 just completed by the project team's time 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.

VIDEO Using earned value management.

Finally—and here's the big whammy—it doesn't really matter where your project monies come from, whether you actually control them, and the processes your organization uses to spend them. Your Project Management Institute (PMI) exam makes you understand all of the appropriate processes and procedures of how projects are estimated, budgeted, and then financially controlled. And that's what we'll discuss in this chapter.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

Get My Free Ebook

Post a comment