PLANNING STAGE (COST) : PLAN COST MANAGEMENT

This is another knowledge area when planning the project. It comprises of 3 processes that need to be followed after having at-hand the activity resources and durations estimates as discussed from the previous processes. Because logically, it is hard to proceed on the execution of the project activities without monetary resource. These processes are

• Plan Cost Management
• Estimate Cost
• Determine Budget

PLAN COST MANAGEMENT

This is the first process in planning costs for the project. It provides guidelines and procedures on how to plan, manage, spend, and control project costs in the project life cycle. 

To perform this process, please refer:

• Scope baseline (which indicates the scope statement and Work Breakdown Structure because if you practice beyond or below the scope, it will automatically impact the project costs)
• Project charter (which provides a summary of the project costs)
• Enterprise Environmental factors (which explains all the environments that may influence project costs such as Market conditions, currency exchange rate, organization structure for instance a person who is involved in authorizing and releasing money for the project etc)
• Organizational Process Assets (which explain the historical information, financial control procedures and lessons learnt from the previous projects regarding the plan cost management process)

This process can also be done by:

• Using the experts who can provide their valuable judgement based on the experiences from the prior similar projects and suggest which method should be used in developing the cost management plan.
• Having a meeting that includes project sponsor, project team, project manager and selected stakeholders who are directly responsible for the project costs.
• Selecting strategical options for funding the project (whether by self, by stocks or by bonds) and possible ways of financing the project resources (if it is by renting, making, or purchasing them)

Cost Management Plan will be an output whereby anything related to the project costs is documented together with agreeable tools and techniques. Furthermore the document will also have unit of measures in form of currency, level of precision whether is round-up or round-down and acceptance range of amount for contingencies (to be mentioned as few).

References:

PMI (2013). A Guide to the Project Management Book of Knowledge (PMBOK Guide 5^th Ed.) USA, Project Management Institute
https://blog.masterofproject.com/cost-management/

Thank you and please don't hesitate to ask, suggest or comment below.

HAVE A BLISSFUL DAY!