Scope n


The last several chapters have been leading up to the development of the project schedule and budget. Chapter 3 introduced the project-planning framework (see Figure 7.1). To support this framework, subsequent chapters introduced several Project Management Body of Knowledge (PMBOK) areas, including project integration management, human resources management, project scope management, and project time management. In this chapter, you will be introduced to another knowledge area called project cost management, which will bring all of the concepts, tools, and techniques covered in the last several chapters together so that the project plan can be developed.

The project plan contains all of the details of the project's schedule and budget. It will be used to guide the project team and monitor the project's progress throughout the project life cycle. Project time management was introduced in the last chapter; however, our focus was on two important processes: Activity definition and activity duration estimation. These two processes are key ingredients for developing the work breakdown structure (WBS) that links the project's scope to the project plan. The development of a project plan, however, requires a schedule and budget. The project schedule builds upon the WBS by identifying the sequence of activities as well as the interdependencies and relationships. Once the activities, their expected durations, and sequence are identified, various project management tools can be used to map a network of activities to yield the project schedule. This information, in turn, can be entered into a project management software package to make developing the project plan more efficient and to provide a means to monitor and control the project schedule and budget as the plan is executed.

The project budget is determined by the project schedule, the cost of the resources assigned to each of the tasks, and by any other direct or indirect costs and reserves. In addition, a PMBOK area called project cost management focuses on the processes, procedures, and techniques to develop and manage the project budget. According to PMBOK, project cost management includes:

• Resource planning—Identifying the type of resources (people, technology, facilities, and so forth) and number of resources needed to carry out the project activities.

• Cost estimating—Based upon the activities, their time estimates, and resource requirements, an estimate can be developed.

• Cost budgeting—Once the time and cost of each activity is estimated, an overall cost estimate for the entire project can be made. Once approved, this estimate becomes the project budget.

• Cost control—Ensuring that proper processes and procedures are in place to control changes to the project budget.



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