This lesson covers plan cost management. Plan cost management is the process that creates the Cost Management Plan which defines the methods used to prepare, configure, track and control costs. It is the initial process that creates the Cost Management Plan. It helps to establish the cost of activities and work packages, establish the cost accounts, establish policies associated with an updated budget and deal with cost changes. [toggle_content title="Transcript"] The cost knowledge area there are four processes we are about to go over. There is plan cost management, estimate costs, determine budget, and control cost. We are going to look at the first one, which is plan cost management. Plan cost management is a process that creates costs management plan, which defines the method used to prepare, configure, track and control costs. Plan cost management is the initial process which creates the cost management plan. If you have been paying attention for every the knowledge area, the first thing that is created for every knowledge area under planning is the plan for that area. This is the cost management plan. The inputs is the project management plan. At this point you create the scope baseline which consists of the WBS, the WBS dictionary and the scope statement. You are going to use those inputs as part of project management plan. The project charter is what is giving you the basis for the project. So at a high level you might have a sponsor who say "I want this project to be done for a hundred thousand dollars". With a hundred dollar input that's in the project, charter is going to be your basis for developing the cost. The tools that you are going to use is expert judgement and analytical techniques. The output for plan cost management is the cost management plan. This helps the project manager and the team with establishing g cost activities and work packages, establishing the cost of accounts. What is the cost accounts? For those working in corporations, in government agencies, there are time code charges when you go into an example like Datatec. You are charging the actual project with the cost account. You can track how much waiver or material is going to that project. Establish policies associated with updating the budget. Some people might have the ability to see the budget, others might not. It is trying to keep that information either private or public to the people that need to know and the people that don't need to know. How do you deal with cost changes? One example is over the years, you are going to expect people to get raises and if your project is over five years, every year you are going to say I assume, or I agree upon a three percent increase of labor maybe a two percent whatever is negotiable with the client. In summary of the plan cost management, your inputs are the project management plan, the project charter. Your tools are expert judgement and analytical techniques and your outputs is just the cost management plan. [/toggle_content]
Project Management Professional (PMP) - PMI
Our online PMP training course educates on how to initiate, plan and manage a project, as well as the process behind analyzing risk, monitoring and controlling project contracts and how to develop project schedules and budgets.