There are three key components of Managing Project Costs
- Estimating Cost: you have to understand what really works is being done to estimate Cost. What is the scope of the work in the project management world? how many Resources, how many hours and what is there pay rate to Estimate Course.
- Determine the timeline For Estimating Costs: determining the timeline is very important because the timeline has to do is when the Money is coming in then You know when to schedule resources to complete the work so you can get it done.
- Keep Costs Under Control: there are all types of bumps in the road where you are going to work every day and so if you are able to understand what is gone break or make your project or your year then that helps you able to makes the right decision while still pleasing your stakeholders also looking and being competent because you know where the money is going and how necessary it is.
In the PMP Exams, these are the processes that we have in the framework
- Estimating Cost: It means that actually saying that how much money am I going to spend in PMP world we break down our scope of the world into a work breakdown Structure packages and then into activities in the known PMP world you might open MS project and type in the activity and resources you need, the pay rate in an environment that is not project base.
You might have Past Project Budget or performance reports from the past and how much you normally spent.
Parameters: How Many Hours do I need this resource, people, material, equipment’s and facilities with their Wage is called a parametric estimate. It might be very accurate because you already have a handshake on the wage and how many hours and you know this really estimates for it
Contracts/Vendor Bids: you might have very confident as have a contract signed with the supplier for some work or material you might be pretty close to be inaccurate because of the vendor bids. A lot of people don’t analyze what can go wrong and how much risk will actually cost our project
Determine Budget: the budget is going to be Formally authorized the time-based expenditure of money
- Aggregate Costs
- Smooth Costs against Funding
- Monitor and Control Costs: now we are working and spending the money, we are completing the work. so as a project manager we are now gathering information, getting invoices who are saying How Much we actually Spent, What our actual Costs and they are also Documenting what is the percent Complete of the work are we 100% complete or 20% complete you don’t be spot on where 18.5 % complete no you just have to Come up with Some rules beforehand that is consistent and people know how to report on how much work has gone Complete.
- Controlling Costs: this is where you can actually say we have got some actual cost and we had a planned value for the work. How much work was actually worth and how much we actually spent. The variance between we planned for and the actual is we have to think is this going to continue is this just a bump in the road we can get back on the road or we have to do something drastic or even better. Its early on I am able to do this monitoring and controlling of my Project because I see very easily something we can do to get back on track sometimes that means that you are just simply determinate more work than money. If you have good information in your trickiness you are going to feel much more confident when you have that conversation with leadership regarding why you spent more than what was planned. Everybody likes predictability when you are in the board room when you are in a conference room or in the office people like predictability and information that indicates why there is an issue because they allow people to take the proper steps to solve that problem.
I think This Article will Helps You to Understand That What is Cost Estimating and Determining Budget.