Project Cost Management

1646 Words7 Pages
Project Cost Management

Review pages 273, 274, and 275!!!










The Importance of Project Cost Management

IT projects have a poor track record for meeting budget goals.

The CHAOS studies found the average cost overrun (the additional percentage or dollar amount by which actual costs exceed estimates) ranged from 180 percent in 1994 to 56 percent in 2004; other studies found overruns to be 33-34 percent.

What is Cost and Project Cost Management?

Cost is a resource sacrificed or foregone to achieve a specific objective or something given up in exchange

Costs are usually measured in monetary units like dollars

Project cost management includes the processes required to
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Sample Cost Estimate

See pages 265-270 for a detailed example of creating a cost estimate for the Surveyor Pro project described in the opening case

Before creating an estimate, know what it will be used for, gather as much information as possible, and clarify the ground rules and assumptions for the estimate

If possible, estimate costs by major WBS categories

Create a cost model to make it easy to make changes to and document the estimate

Determining the Budget

Cost budgeting involves allocating the project cost estimate to
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