Chapter 6: Project Cost Management 2017/11/10 1 Learning Objectives Understand the importance of good project cost management Explain basic cost management principles, concepts, and terms Describe the resource planning, cost estimating, cost budgeting, and cost control processes Explain the different types of cost estimates Understand what is involved in preparing a cost estimate for an information technology project Perform calculations for earned value management Understand the benefits of using earned value management Describe how software can assist in project cost management 2017/11/10 2 Chapter Outline The Importance of Project Cost Management Basic Principles of Cost Management Resource Planning Cost Estimating Types of Cost Estimates Cost Estimation Tools and Techniques Typical Problems with Information Technology Cost Estimates Sample Cost Estimates and Supporting Detail for an Information Technology Project Cost Budgeting Cost Control Earned Value Management Using Software to Assist in Cost Management 2017/11/10 3 The Importance of Project Cost Management 2017/11/10 4 The Importance IT projects have a poor track record for meeting cost goals Average cost overrun from 1995 CHAOS study was 189% of the original estimates; improved to 45% in the 2001 study In 1995, cancelled IT projects cost the . over $81 billion 2017/11/10 5 What is Cost and Project Cost Management? Cost is a resource sacrificed or fore-gone to achieve a specific objective or something given up in exchange Costs are usually measured in ary units like dollars Project cost management includes the processes required to ensure that the project pleted within an approved budget 2017/11/10 6 Project Cost Management Processes Resource planning: determining what resources and quantities of them should be used Cost estimating: developing an estimate of the costs and resources needed plete a project Cost budgeting:
