Project Cost Management Processes

Question 1

Estimate Costs

Answer 1

The process of developing an approximation of the monetary resources needed to complete project activities.

Question 2

Determine Budget

Answer 2

The process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline

Question 3

Control Costs

Answer 3

The process of monitoring the status of the project to update the project budget and managing changes to the cost baseline.

Question 4

Level of Accuracy

Answer 4

Activity cost estimates will adhere to a rounding of the data to a prescribed precision (e.g., $100, $1,000), based on the scope of the activities and magnitude of the project, and may include an amount for contingencies.

Question 5

Units of Measure

Answer 5

Each unit used in measurements (such as staff hours, staff days, weeks, or lump sum) is defined for each of the resources.

Question 6

Organizational Procedures Links

Answer 6

The work breakdown structure (WBS) (Section 5.3.3.1) provides the framework for the cost management plan, allowing for consistency with the estimates, budgets, and control of costs. The WBS component used for the project cost accounting is called the control account (CA). Each control account is assigned a unique code or account number(s) that links directly to the performing organization’s accounting system.

Question 7

Control Thresholds

Answer 7

Variance thresholds for monitoring cost performance may be specified to indicate an agreed-upon amount of variation to be allowed before some action needs to be taken. Thresholds are typically expressed as percentage deviations from the baseline plan.

Question 8

Rules of Performance Measurement

Answer 8

“Earned value management (EVM) rules of performance measurement are set. For example, the cost management plan could: Define the WBS and points at which measurement of control accounts will be performed, Establish the earned value measurement techniques (e.g., weighted milestones, fixed-
formula, percent complete, etc.) to be employed, and Specify the earned value management computation equations for determining the projected estimate at completion (EAC) forecasts and other tracking methodologies.”

Question 9

Reporting Formats

Answer 9

The formats and frequency for the various cost reports are defined.

Question 10

Process Descriptions

Answer 10

Descriptions of each of the three cost management processes are documented.