PROJECT TIME MANAGEMENT Project Time Management is a group of processes required to ensure timely completion of the project.

Time, Cost, Scope are initially known as Triple constraints. If you change one of these three there will be direct impact on other . Quality and Risk were also added to those constraints
PHASES & PROCESSES There are following processes which are part of Project Time Management.
Initiation Planning NA

Execution Controlling Closure

i. ii. iii. iv. v. i.

NA NA

Define activities ( list the project activities) Activity Sequencing (order the activities and create the project network diagram) Activity Resource Estimating (estimating the resources needed to complete each activity) Activity Duration Estimating (determine time estimates for each activity) Schedule Development (create the schedule) Schedule Control (monitor schedule performance)

Define Activities
Identify the activities that must be performed to produce the project deliverables. In other words activity definition defines the activities that must be performed to meet the project objectives The Activity Definition process will identify the deliverables at the lowest level in the work breakdown structure (WBS), which is called the work package. Activity Definition process is a part of "Project Planning Phase". (1) ACTIVITY DEFINITION - INPUTS (1.1) Enterprise Environmental Factors: Enterprise environmental factors that can be considered include availability of project management information systems and scheduling software tools. PMIS. (1.2) Organizational Process Assets: Organizational process assets contain the existing formal and informal activity planningrelated policies, procedures, and guidelines that are considered in developing the activity definitions. (1.3) Scope Baseline : The project deliverables, constraints, and assumptions documented in the project scope statement are considered explicitly during activity definition. WBS: The work breakdown structure is a primary input to schedule activity definition. WBS Dictionary: The WBS dictionary is a primary input to schedule activity definition. Project Management Plan: The project management plan contains the schedule management plan, which provides guidance on the development, and planning of schedule activities and the project scope management plan. (2) ACTIVITY DEFINITION - TOOLS & TECHNIQUES (2.1) Decomposition: Subdividing project activities into smaller, more manageable components (2.2) Template: An activity list from a previous project or an activity list for a WBS element from the current project. (2.3) Rolling Wave Planning: Rolling wave planning is a form of progressive elaboration planning where the work to be accomplished in the near term is planned in detail at a low level of the WBS. The work to be performed within another one or two reporting periods in the near future is planned in detail as work is being completed during the current period. (2.4) Expert Judgment: Project team members or other experts who are experienced and skilled in developing detailed project scope statements, WBSs, and project schedules can provide expertise in defining activities. (2.5) Planning Component: Two planning components are: Control Account: A management control point can be placed at selected management points of the work breakdown structure above the work package level. These control points are used as a basis for planning when associated work packages have not yet been planned. All work and effort performed within a control account is documented in a control account plan. Planning Package: A planning package is a WBS component below the control account, but above the work package. (3) ACTIVITY DEFINITION - OUTPUTS (3.1) Activity list : A list of all the activities that will be performed on the project and a description of each activity. (3.2) Activity Attributes: These activity attributes are an extension of the activity attributes in the activity list and identify the multiple attributes associated with each schedule activity. It can include WBS-ID ,activity codes, activity description, successor /predecessor activity ,logical relationships. Leads and lags ,Level of effort (LOE),apportioned effort (AE). (3.3) Milestone List: The list of schedule milestones identifies all milestones & indicates whether the milestone is mandatory or optional. Milestone Charts - good for reporting to management, customer. Shows only major events. (3.2) Requested Changes : The Activity Definition process can generate requested changes that can affect the project scope statement and WBS.

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Sequence Activities
Establishing the activity logic and the dependencies needed to create a realistic and achievable schedule. Activity Sequencing process is a part of "Project Planning Phase" in Time Management. (1) SEQUENCE ACTIVITIES - INPUTS (1.1) Activity list: A list of activities, output from activities definition. Includes activity identifier and scope of work description for each activity in detail for each member of team to understand what needs to be done. (1.2) Activity Attributes: These activity attributes are an extension of the activity attributes in the activity list . and identify the multiple attributes associated with each schedule activity. (1.3) Milestone List (2) SEQUENCE ACTIVITIES - TOOLS & TECHNIQUES (2.1) Precedence diagramming method (PDM ): Nodes represent activities and arrows show dependencies. This technique is also called activity-on-node (AON) and is the method used by most project management software packages. PDM includes four types of dependencies or precedence relationships: Finish-to-Start: Activity A must finish before Activity B can start. Start-to-Start: Activity A must start before Activity B can start. Finish-to-Finish: Activity A must finish before Activity B can finish. Start-to-Finish: Activity A must start before Activity B can finish. Here first two type of dependencies are most frequently used and last two dependencies are least frequently used. As per PMbok4 FS is most commonly used and SF is most rarely used. Leads and Lags :A lag is a delay in starting a successor. A lead is when successor can be started before the current task completed. 2.2) Dependency Determination:Three types of dependencies are used to define the sequence among the activities. Mandatory dependencies (Hard logic): Determined by the nature of work to be done. A mandatory dependency is one that cannot be broken Discretionary dependencies (Preferred logic/Soft logic): Defined by the project management team. Discretionary dependencies are also known as soft logic or preferred logic and are typically based on historical information, expert judgment, and best practices.Eg There is no absolute rule that says the carpet could not be installed before the painting begins. External dependencies : Relationships between project activities and non-project activities. E.g. delivery of hardware of an external supplier. (2.3) Schedule Network Templates: Standardized networks can be used to expedite the preparation of Project Network Diagram. This can include an entire project or only a portion of it. Portion or a network are often refrred to as subnet or fragments. (2.4) Applying Leads and Lags: A lead allows an acceleration of the successor activity and A lag directs a delay in the successor activity. (3) SEQUENCE ACTIVITIES - OUTPUTS (3.1) Project Schedule network diagram : Schematic displays of project's activities and logical relationships (dependencies) between them. A Project Network Diagram is often referred to as a PERT chart. Historically PERT( Program Evaluation and Revue Technique) was specific type of Network diagram. We will see complete formula for PERT in next process (3.2) Activity list updates : Adding, dividing or redefining activities so that the relationships are correctly diagrammed. (3.3) Activity Attributes updates: The activity attributes are updated to include the defined logical relationships and any associated leads and lags. (3.4) Requested Changes: Preparation of project logical relationships, leads, and lags might reveal instances that can generate a requested change to the activity list or the activity attributes.

Estimate Activity Resources

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Estimating schedule activity resources involves determining what resources like persons, equipment, or materiel etc. and what quantities of each resource will be used, and when each resource will be available to perform project activities.Activity Resource Estimating process is part of "Project Planning Phase". (1) ESTIMATE ACTIVITY RESOURCE - INPUT (1.1) Enterprise Environmental Factors: The Activity Resource Estimating process uses the infrastructure resource availability information included in enterprise environmental factors (1.2) Organizational Process Assets: Organizational process assets provide the policies of the performing organization regarding staffing and the rental or purchase of supplies and equipment that are considered during activity resource estimating. (1.3) Activity List: The activity list identifies the schedule activities for resources that are estimated. (1.4) Activity Attributes: The activity attributes developed during the activity definition process provide the primary data input for use in estimating those resources required for each schedule activity in the activity list. (1.5) Resource Availability: Information on which resources such as people, equipment, and materiel etc are potentially available is used for estimating the resource types. This knowledge includes consideration of various geographical locations from which the resources originate and when they may be available. (1.6) Project Management Plan: The schedule management plan is a component part of the project management plan that is used in Activity Resource Estimating. (2) ESTIMATE ACTIVITY RESOURCE - TOOLS & TECHNIQUES (2.1) Expert Judgment: Expert judgment is often required to assess the resource-related inputs to this process. Any group or person with specialized knowledge in resource planning and estimating can provide such expertise. (2.2) Published Estimating Data: Several companies routinely publish updated production rates and unit costs of resources for an extensive array of labor trades, materiel, and equipment for different countries and geographical locations within countries. (2.3) Alternatives Analysis: Many schedule activities have alternative methods of accomplishment. They include using various levels of resource capability or skills, different size or type of machines, different tools etc. (2.4) Project Management Software: Project management software has the capability to help plan, organize, and manage resource pools and develop resource estimates. (2.5) Bottom-up Estimating: The resource needs of each lower, more detailed piece of work are estimated, and these estimates are then aggregated into a total quantity for each of the schedule activity.s resources. (3) ESTIMATE ACTIVITY RESOURCE - OUTPUTS (3.1) Activity Resource Requirements: The output of the Activity Resource Estimating process is an identification and description of the types and quantities of resources required for each schedule activity in a work package (3.2) Activity Attributes updates: Types and quantities of resources required for each schedule activity are incorporated here. (3.3) Resource Breakdown Structure : The resource breakdown structure (RBS) is a hierarchical structure of the identified resources by resource category and resource type. (3.4) Resource Calendar updates: A composite resource calendar for the project documents working days and nonworking days that determine those dates on which a specific resource, whether a person or materiel, can be active or is idle. (3.5) Requested Changes: The Activity Resource Estimating process can result in requested changes to add or delete planned schedule activities within the activity list.

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Estimate Activity Duration

Estimating the number of work periods likely to be needed to complete each activity.Activity duration estimating is part of "Project Planning Phase". (1) ACTIVITY DURATION ESTIMATING - INPUT (1.1) Enterprise Environmental Factors: One or more of the organizations involved in the project may maintain duration estimating databases and other historical reference data. This type of reference information is also available commercially. (1.2) OPA : Historical information on the likely durations of many categories of activities is often available. One or more of the organizations involved in the project may maintain records of previous project results that are detailed enough to aid in developing duration estimates. (1.3) Project Scope Statement: The constraints and assumptions from the project scope statement are considered when estimating the schedule activity durations. (1.4) Activity List & Attributes (1.5) Activity Resource Requirements: Duration estimates are influenced by resource effort and assignments. (1.6) Resource Calendar: The composite resource calendar developed as part of the Activity Resource Estimating process, includes the availability, capabilities, and skills of human resources. (1.7) Project Management Plan: The project management plan contains the risk register and project cost estimates Risk Register: has information on identified project risks that the project team considers when producing estimates of activity durations and adjusting those durations for risks. Activity Cost Estimates: The project activity cost estimates, if already completed, can be developed in sufficient detail to provide estimated resource quantities for each schedule activity in the project activity list. (2) ACTIVITY DURATION ESTIMATING - TOOLS & TECHNIQUES (2.1) Expert judgment: Used with historical information. (2.2) Analogous estimates : Also called Top-down estimating, Uses duration of a previous, similar activity as the basis. Its form of expert judgement. (2.3) Parametric Estimating: Estimating the basis for activity durations can be quantitatively determined by multiplying the quantity of work to be performed by the productivity rate. (2.4) Three-Point Estimates: Three-point estimates are based on determining three types of estimates: Most likely:The activity duration is based on a average-case scenario of what is described in the most likely estimate. Optimistic: The activity duration is based on a best-case scenario of what is described in the most likely estimate. Pessimistic : The activity duration is based on a worst-case scenario of what is described in the most likely estimate. (2.5) Reserve Analysis ( Contingency ): Project teams may choose to incorporate an additional time frame, called time reserve, contingency or buffer, that can be added to the activity duration or elsewhere in the schedule as recognition of schedule risk. (3) ACTIVITY DURATION ESTIMATING - OUTPUT (3.1) Activity Duration estimates : Quantitative assessments of the likely number of work periods required to complete an activity. (3.2) Activity attributes updates: The activity attributes are updated to include the durations for each schedule activity, the assumptions made in developing the activity duration estimates, and any contingency reserves.

Schedule Development
Determining the start and finish dates of project activities.If start and finish dates are not realistic, the project is unlikely to be
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finished on schedule.Schedule development process is part of "Project Planning Phase". (1) SCHEDULE DEVELOPMENT - INPUT (1.1) Organizational Process Assets (1.2) Project Scope Statement (1.3) Activity List & Activity Attributes (1.4) Project Schedule Network Diagrams (1.5) Activity Resource Requirements (1.6) Resource Calendars (1.7) Activity Duration Estimates (1.8) Project Management Plan (2) SCHEDULE DEVELOPMENT - TOOLS & TECHNIQUES (2.1) Mathematical analysis: Calculating theoretical early and late start and finish dates for all activities Critical Path Method (CPM): Calculates a single, deterministic early and late start and finish date for each activity, to be used to determine which activities must be completed on time to avoid impacting the finish date of the project. The focus of CPM is calculating float to determine which activities have the least scheduling flexibility. Program Evaluation and Review Technique (PERT): Uses a weighted average duration estimate to calculate duration. Uses the probability of an estimate.s accuracy. Expected Time = PERT = (O + 4M + P) / 6 where : P = Pessimistic , O =
Optimistic ,M = Most likely; Realistic

Graphical Evaluation and Review Technique ( GERT ): allows for probabilistic treatment of both network logic and activity duration estimates ( ie. some activities may not be performed at all, come may be performed only in part and others may be performed more than once.

(2.2)Schedule compression: Duration compression is a special case of mathematical analysis that looks for ways to shorten the project schedule without changing the project scope. Duration compression includes techniques such as: Crashing : Project crashing is a method for shortening the project duration by reducing the time of one or more of the critical project activities to less than its normal activity time. The objective of crashing is to reduce project duration while minimizing the cost of crashing. CRASHING is reducing project time by expending additional resources. CRASH TIME is an amount of time an activity is reduced. CRASH COST is the cost of reducing activity. Fast Tracking: Doing activities in parallel that would normally be done in sequence ( eg. starting to write code on a software project before the design is complete). Fat tracking often results in rework and usually increases risk (2.3) Resource Leveling Heuristics: Allocate scare resources to critical path activities first etc. (2.4) Project Management Software: MSP etc are widely used to prepare a project schedule (2.5) Applying Calendars: Project calendars and resource calendars identify periods when work is allowed. Project calendars affect all activities. (2.6) Adjusting Leads and Lags: Since the improper use of leads or lags can distort the project schedule, the leads or lags are adjusted during schedule network analysis to develop a viable project schedule. (2.7) Schedule Model: Schedule data and information are compiled into the schedule model for the project. (2.8) Critical Chain Method: Critical chain is another schedule network analysis technique that modifies the project schedule to account for limited resources. Critical chain combines deterministic and probabilistic approaches. (2.9) What-If Scenario Analysis: This is an analysis of the question .What if the situation represented by scenario .X. happens?" (3) SCHEDULE DEVELOPMENT - OUTPUTS (3.1) Schedule Development: Includes planned start and expected finish dates for each activity. (3.2) Schedule Model Data : Supporting data for the project schedule includes at least the schedule milestones, schedule activities, activity attributes and documentation of all identified assumptions and constraints. (3.3) Schedule Baseline: A schedule baseline is a specific version of the project schedule developed from the schedule network analysis of the schedule model. It is accepted and approved by the project management team as the schedule baseline with baseline start dates and baseline finish dates. (3.4) Resource requirement updates : Updates based on the results of resource leveling. (3.5) Activity Attributes updates (3.6) Project Calendar updates (3.7) Requested Changes: The Schedule Development process can create requested changes that are processed for review and disposition through the Integrated Change Control process (3.8) Project Management Plan updates

Schedule Control
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Schedule control is concerned with, Determining the current status of the project schedule Influencing factors that cause schedule changes ensuring these are agreed upon Determining that the schedule has changed Managing the changes when and as they occur. Schedule Control process is a part of "Project Controlling Phase". (1) SCHEDULE CONTROL - INPUT (1.1) Schedule management plan: Defines how changes to the schedule will be managed. (1.2) Schedule Baseline : The approved project schedule is called the schedule baseline; provides the basis for measuring and reporting schedule performance. (1.3) Performance reports : Provide information on schedule performance, such as which planned dates have been met and which have not. (1.4) Approved Change requests: Change request may occur in many forms - oral or written , direct or indirect, externally or internally..... (2) SCHEDULE CONTROL - TOOLS & TECHNIQUES (2.1) Progress Reporting: The progress reporting and current schedule status includes information such as actual start and finish dates, and the remaining durations for unfinished schedule activities. (2.2) Schedule change control system : Defines the procedure for changing the project schedule. It includes the paper work, tracking system, and approval levels necessary for authorizing changes. Schedule change control should be integrated with the integrated change control system. (2.3) Performance measurement (Earned Value): Assessment of schedule variations to determine whether they require corrective actions. For example, a major delay on a noncritical activity may have little effect on the overall project while a much shorter delay on a critical activity may require immediate action. (2.4) Project Management software: For tracking planned dates against actual dates and forecasting. Useful tool for Schedule Control. (2.5) Variance Analysis : Comparing target dates with the actual/forecast start and finish dates. (2.6) Schedule Comparison Bar Charts : To facilitate analysis of schedule progress, it is convenient to use a comparison bar chart, which displays two bars for each schedule activity. One bar shows the current actual status and the other shows the status of the approved project schedule baseline. (3) SCHEDULE CONTROL - OUTPUT (3.1) Schedule Model Data updates : A schedule update is any modification to the schedule information that is used to manage the project. Revisions are special category of schedule updates. (3.2) Schedule Baseline updates: Schedule revisions are a special category of project schedule updates. Revisions are changes to the schedule.s start and finish dates in the approved schedule baseline. (3.3) Performance Measurements: The calculated schedule variance (SV) and schedule performance index (SPI) values for WBS components, in particular the work packages and control accounts, are documented and communicated to stakeholders. (3.4) Requested Changes: Schedule variance analysis, along with review of progress reports, results of performance measures, and modifications to the project schedule model can result in requested changes to the project schedule baseline. (3.5) Corrective action : Anything done to bring expected future schedule performance back in-line with the project plan. (3.6) Organizational Process Assets updates: Lessons learned documentation of the causes of variance, the reasoning behind the corrective actions chosen, and other types of lessons learned from schedule control are documented in the organizational process assets (3.7) Activity List & Attributes Updates (3.8) Project Management Plan updates

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Last Moment Revision for Time Management questions o Activity : An element of work performed during the course of a project. (Normally has duration, cost, and resource requirements.) o Baseline : The original plan plus or minus approved changes. o Arrow Diagram Method (ADM) : A network diagramming technique in which activities are represented by arrows. The tail of the arrow represents the start and the head of the arrow represents the end of the activity. Activities are connected at points called nodes to illustrate the sequence in which activities are expected to be performed. Also called Activity-On-Arrow (AOA). o Backward Pass : The calculation of late finish and start dates for the uncompleted portions of all network activities. Determined by working backwards through the network logic from the project's end date. o Concurrent Engineering: Generally speaking, an approach to project staffing that calls for the implementers to be involved in the design phase. (sometimes confused with fast tracking.) o Critical Activity : An activity on a critical path. o Critical Path : The series of activities which determines the earliest completion of the project. The critical path is usually defined as those activities with float less than or equal to a specified value (usually zero). o Control Account: A management control point where scope, budget, actual cost, and schedule are integrated and compared to earned value for performance management. Control points are places at selected management points of the WBS. Each control account may include one or more work package but each work package may be associated with only one control account. o Discretionary dependencies (Soft logic): Defined by the project management team. o Dummy Activity: An activity of zero duration used to show a logical relationship in the arrow diagramming method. Dummy activities are used when logical relationships cannot be completely or correctly described with regular activity arrows. Dummies are shown graphically as a dashed line headed by an arrow. o Early Finish Date (EF): In the critical path method, the earliest possible date in which the uncompleted portions of an activity or project can complete. Can change as the project progresses. o Early Start Date (ES): In the critical path method, the earliest possible date in which the uncompleted portions of an activity or project can start Can change as the project progresses. o External dependencies : Relationships between project activities and non-project activities. E.g. delivery of hardware of an external supplier. o Float: The amount of time that an activity may be delayed from its early start without delaying the project finish date. (Also called slack, total float, and path float). o Forward Pass : The calculation of the early start and early finish dates for the uncompleted portions of all network activities. o Free Float (FF): The amount of time an activity can be delayed without delaying the early start of any immediately succeeding activities. o Gantt Chart: A graphic display of schedule-related information using bars.GERT is another type of network diagram. It can support looping. o Hammock: An aggregate or summary activity. o Hanger: An unintended break in a network path. Hangers are usually caused by missing activities or missing logical relationships. o Lag: A modification of a logical relationship which directs a delay in the successor task. Lags are inserted waiting times in between tasks. For example Task B cannot start until three days after task A completes. o Late Finish Date (LF): In the critical path method, the latest possible date that an activity may be completed without delaying a specified milestone (usually the project finish date). o Late Start Date (SF): In the critical path method, the latest possible date that an activity may begin without delaying a specified milestone (usually the project finish date). o Lead : A modification of a logical relationship which allows an acceleration of the successor task. For example, in a FS relationship with a 10 day lead, the successor can start 10 days prior to the completion of the predecessor. o Mandatory dependencies (Hard logic): Determined by the nature of work to be done. o Master Schedule: A summary level schedule which identifies the major activities and milestones. o Milestone: A significant event in the project, usually completion of a major deliverable. o Milestone Schedule: A summary level schedule which identifies the major milestones. o Path Convergence: In mathematical analysis, the tendency of parallel paths of approximately equal duration to delay the completion of the milestone where they meet. o Precedence Diagram Method (PDM): A network diagramming technique in which activities are represented by nodes. Activities are linked by precedence relationships to show the sequence in which the activities are to be performed.

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Program Evaluation and Review Technique (PERT): An event-oriented network analysis technique used to estimate project duration when there is a high degree of uncertainty with the individual activity duration estimates. Project Network Diagram: Any schematic display of the logical relationships of project activities. Always drawn from left to right to reflect project chronology. Often incorrectly referred to as a "PERT chart". Resource Leveling: Any form of network analysis in which start and finish dates are driven by resource management concerns.Resource leveling refers to keeping the resources same across the duration of the project. Resource-Limited Schedule: A project schedule whose start and finish dates reflect expected resource availability. The final project schedule should always be resource limited. Resource pool: Description of the available resources and the times they are available to work on the project Scheduled Finish Date (SF): The point in time work was scheduled to finish on an activity. The scheduled finish date is normally within the range of dates delimited by the early finish date and the late finish date. Scheduled Start Date (SS): The point in time work was scheduled to start on an activity. The scheduled start date is normally within the range of dates delimited by the early start and late start dates Simulation: involves calculating multiple project durations with different sets of activity assumptions. The most common technique is Monte Carlo Analysis, in which a distribution of probable results is defined for each activity and used to calculate a distribution of probable results for the total project. Time-Scaled Network Diagram: Any project network diagram drawn is such a way that the positioning and length of the activity represents its duration. Essentially, it is a bar chart that includes network logic. Work Item: Synonymous with activity. If a project has more than one critical paths then the risk to the project increases. Longest path through the network diagram is called the critical path. The activities on the critical paths are called critical activities. Slack or Float is the amount of time a task can be delayed without delaying the project. Tasks on the critical path have zero float. Bar charts (or Gantt charts) are used to display tasks and their dates in a graphical fashion. They are used to display information of the type task 1 is scheduled from date A to date B. Typically the date range is displayed in the X-axis and the tasks on the Y-axis. Bar charts do not show task dependencies. They are generally used to track progress and show to the team. Milestone charts are similar to bar charts but display only major events. They display major milestones (for example bridge design completed). They are used to report to Mgmt.

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COST MANAGEMENT
Cost Estimating
Cost estimating is the process of calculating the costs of the identified resources needed to complete the project work. The person or group doing the estimating must consider the possible fluctuations, conditions, and other causes of variances that could affect the total cost of the estimate.There is a distinct difference between cost estimating and pricing. A cost estimate is the cost of the resources required to complete the project work. Pricing, however, includes a profit marginProcess of developing an approximation (or estimate) for the cost of the resources necessary to complete the project activities.. Cost Estimating process is a part of "Project Planning Phase". 1) COST ESTIMATING - INPUTS (1.1) Enterprise Environmental Factors: The Cost Estimating process considers: Marketplace conditions: What products, services, and results are available in the marketplace, from whom, and under what terms and conditions Commercial databases: Resource cost rate information is often available from commercial databases that track skills and human resource costs, and provide standard costs for material and equipment. (1.2) Organizational Process Assets: Existing formal and informal cost estimating-related policies, procedures, and guidelines are considered in developing the cost management plan. (1.3) Project Scope Statement: The project scope statement describes the business need, justification, requirements, and current boundaries for the project. It provides important information about project requirements that is considered during cost estimating (1.4) Work Breakdown Structure: Used to organize the cost estimates and to ensure that the cost of all identified work has been estimated. (1.5) WBS Dictionary: The WBS dictionary and related detailed statements of work provide an identification of the deliverables and a description of the work in each WBS component required to produce each deliverable. (1.6) Project Management Plan: The project management plan provides the overall plan for executing, monitoring, and controlling the project, and includes subsidiary plans that provide guidance and direction for cost management planning and control. Information like Resource requirements, Resource rates, and various Risks involved are considered while preparing cost estimate (2) COST ESTIMATING - TOOLS & TECHNIQUES (1.1) Analogous estimating : Analogous estimating is also called top-down estimating and uses the actual cost of a previous, similar project as the basis for estimating the cost of the current project. It is frequently used to estimate total project costs when there is a limited amount of detailed information about the project. Analogous estimating is a form of expert-judgment. (1.2) Expert Judgment: determining the rates or the group preparing the estimates must know the unit cost rates, such as staff cost per hour and bulk material cost per cubic yard, for each resource to estimate schedule activity costs. (1.3) Bottom-up estimating : Estimating the cost of individual work items and then rolling up the costs to arrive at a project total - more accurate. (1.4) Parametric modeling : Mathematical model to predict costs (e.g., price per square foot so for 10,000 sq f ?). (1.5) Project Management Software: Project management software, such as cost estimating software applications, computerized spreadsheets, and simulation and statistical tools, are widely used to assist with cost estimating. (1.6) Vendor Bid Analysis: In cases where projects are won under competitive processes, additional cost estimating work can be required of the project team to examine the price of individual deliverables, and derive a cost that supports the final total project cost. (1.7) Reserve Analysis: Many cost estimators include reserves, also called contingency allowances, as costs in many schedule activity cost estimates. (1.8) Cost of Quality: Cost of quality can also be used to prepare the schedule activity cost estimate. (1.9) Three point estimates : PERT analysis uses 3 estimates to define an approximate range for an activity cost. CM = Most likely i.e realistic effort assessment cost , CO = Best case scenario cost , CP = Worst case scenario cost. Then formula is for stimate cost CE = ( CO + 4CM + CP )/4 . (3) COST ESTIMATING - OUTPUTS (3.1) Activity Cost estimates : Quantitative assessments of the cost of resources (e.g., units of currency or staff hours). (3.2) Basis of Estimates: Description of estimated scope of work , Documentation of the basis for the estimate like constraints Documentation of any assumptions made , Range of possible estimates (plus minus 10% or 50%) (3.3) Project document updates Requested changes that may affect the cost management plan , activity resource requirements, and other components of the project management plan. Cost Management Plan Update: If approved change requests result from the Cost Estimating process, then the cost management plan component of the project management plan is updated if those approved changes impact the management of costs.
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Cost Budgeting
Allocating the value of the overall cost estimate to individual work items, in order to establish a cost baseline for measuring project performance. Cost Budgeting estimating is part of "Project Planning Phase". (1) COST BUDGETING - INPUT (1.1) Scope Baseline (WBS provides the relationship among all the components of the project and the project deliverables.WBS Dictionary: The WBS dictionary and related detailed statements of work provide an identification of the deliverables and a description of the work in each WBS component required to produce each deliverable and last but not least Project Scope Statement: ) Activity Cost Estimates: The cost estimates for each schedule activity within a work package are aggregated to obtain a cost estimate for each work package. Basis of Estimates Project Schedule: The project schedule includes planned start and finish dates for the project.s schedule activities, schedule milestones, work packages, planning packages, and control accounts. This information is used to aggregate costs to the calendar periods when the costs are planned to be incurred. Resource Calendars Contract: Contract information related to what products, services, or results have been purchased . and their costs . are used in developing the budget. Cost Management Plan: The cost management plan component of the project management plan and other subsidiary plans are considered during cost budgeting.

(1.2) (1.3) (1.4)

(1.5) (1.6) (1.7)

(2) COST BUDGETING - TOOLS & TECHNIQUES 1. Cost Aggregation: Schedule activity cost estimates are aggregated by work packages in accordance with the WBS. The work package cost estimates are then aggregated for the higher component levels of the WBS, such as control accounts, and ultimately for the entire project. Reserve Analysis: Reserve analysis establishes contingency reserves, such as the management contingency reserve, that are allowances for unplanned, but potentially required, changes. Such changes may result from risks identified in the risk register Parametric Estimating: The parametric estimating technique involves using project characteristics (parameters) in a mathematical model to predict total project costs. Funding Limit Reconciliation: Large variations in the periodic expenditure of funds are usually undesirable for organizational operations. Therefore, the expenditure of funds is reconciled with the funding limits set by the customer or performing organization on the disbursement of funds for the project.

2.

3. 4.

(3) COST BUDGETING - OUTPUT 1. 2. Cost Performance baseline: Time phased budget that will be used to measure and monitor the cost performance of the project. Project Funding Requirements: Funding requirements, total and periodic (e.g., annual or quarterly), are derived from the cost baseline and can be established to exceed, usually by a margin, to allow for either early progress or cost overruns. Cost Management Plan updates: If approved change requests result from the Cost Budgeting process, then the cost management plan component of the project management plan is updated if those approved changes impact the

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Cost Control
Cost Control process is part of "Project Controlling Phase". Project cost control includes: Influencing the factors that create changes to the cost baseline & Ensuring requested changes are agreed upon Managing the actual changes when and as they occur & Monitoring cost performance to detect variances from the plan. Recording all appropriate changes accurately against the cost baseline & Ensuring that all appropriate changes are recorded. Preventing incorrect, inappropriate, or unauthorized changes from being included & Informing the appropriate stakeholders of authorized changes. Act to bring expected costs within acceptable limits & Analyzing positive and negative variances. (1) COST CONTROL - INPUT (1.1) Project Funding Requirements (1.2) Work Performance Information 1.3) Project Management Plan: The project management plan and its cost management plan component and other subsidiary plans are considered when performing the Cost Control process. And cost performance baseline (1.) Approved Change requests : Approved change requests from the Integrated Change Control process (Section section 4.6) can include modifications to the cost terms of the contract, project scope, cost baseline, or cost management plan.( (2) COST CONTROL - TOOLS & TECHNIQUES (2.1) EVM : (PV EV PV EV CPI SPI ) (2.3) Forecasting: Forecasting includes making estimates or predictions of conditions in the project.s future based on information and knowledge available at the time of the forecast. (2.4) Performance Reviews: Performance reviews compare cost performance over time, schedule activities or work packages overrunning and under running budget (planned value), milestones due, and milestones met. (2.5) Project Management Software: Project management software, such as computerized spreadsheets, is often used to monitor PV versus AC, and to forecast the effects of changes or variances. (2.6) Variance Analysis: The cost management plan describes how cost variances will be managed, for example, having different responses to major or minor problems. The amount of variance tends to decrease as more work is accomplished. (3) COST CONTROL - OUTPUTS (3.1) Cost Estimates updates : Revised schedule activity cost estimates are modifications to the cost information used to manage the project. (3.2) Work Performance Measurements: The calculated CV, SV, CPI, and SPI values for WBS components, in particular the work packages and control accounts, are documented and communicated. (3.3) Budget forecasts: Either a calculated EAC value or a performing organization-reported EAC value is documented and the value communicated to stakeholders. Either a calculated ETC value or a reported ETC value provided by the performing organization is documented and the value communicated to stakeholders. (3.4) Requested Changes: Analysis of project performance can generate a request for a change to some aspect of the project. (3.5) Organizational Process Assets updates: Lessons learned are documented so they can become part of the historical databases for both the project and the performing organization. (3.6) Project Management Plan updates: Schedule activity, work package, or planning package cost estimate, as well as the cost baseline , cost management plan, and project budget documents are components of the project management plan. All approved change requests affecting those documents are incorporated as updates to those documents. Recommended Corrective Actions: Corrective action is anything done to bring expected future project performance in line with the project plan. Cost Baseline updates: Budget updates are changes to an approved cost baseline.

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Last Moment Revision for Cost Management by mgr810: Specifically, cost control focuses on these activities: Controlling causes of change to ensure the changes are actually needed Controlling and documenting changes to the cost baseline as they happen Controlling changes in the project and their influence on cost Performing cost monitoring to recognize and understand cost variances Recording appropriate cost changes in the cost baseline Preventing unauthorized changes to the cost baseline Communicating the cost changes to the proper stakeholders Working to bring and maintain costs within an acceptable range Cost control is an ongoing process throughout the project. The project manager must actively monitor the project for variances to costs. Specifically, the project manager always does the following: Monitor cost variances and then understand why variances have occurred Update the cost baseline as needed based on approved changes Work with the conditions and stakeholders to prevent unnecessary changes to the cost baseline Communicate to the appropriate stakeholders cost changes as they occur Maintain costs within an acceptable and agreed range

Actual Cost (AC): AC is the total cost incurred in accomplishing work on the schedule activity or WBS component during a given time period. It is also referred as ACWP (Actual Cost of Work Performed). Budget At Completion (BAC): The estimated total cost of the project when done. Budgeted Cost of Work Performed (BCWP): The sum of the approved cost estimates for activities completed during a given period (usually project-to-date). Budgeted Cost of Work Scheduled (BCWS): The sum of the approved cost estimates for activities scheduled to be performed during a given period. Chart of Accounts: Any numbering system used to monitor project costs by category (e.g., labor, supplies, materials). The project chart of accounts is usually based upon the corporate chart of accounts of the primary performing organization. Code of Accounts: Any numbering system used to uniquely identify each element of the WBS. Contingency Reserve: A separately planned quantity used to allow for future situations which may be planned for only in part ("known unknowns"). Contingency reserves are intended to reduce the impact of missing cost or schedule objectives. Contingency reserves are normally included in the project's cost and schedule baselines. Cost Budgeting: Allocating the cost estimates to individual project components. Cost Control: Controlling changes to the project budget. Cost Estimating: Estimating the cost of the resources needed to complete project activities. Cost Performance Index (CPI): The ratio of budgeted costs to actual costs (BCWP / ACWP). CPI is often used to predict the magnitude of a possible cost overrun using the following formula: original cost estimate/CPI = projected cost at completion. If CPI is less than 1, this means that the project is over budget. Cost of Quality: Total cost for keeping the quality up to a defined standard. It includes cost like performing reviews, audits etc. Cost Variance (CV): Any difference between the estimated cost of an activity and the actual cost of that activity. In earned value, CV = BCWP-ACWP. Earned Value: A method for measuring project performance. It compares the amount of work that was planned with what was actually accomplished to determine if cost and schedule performance is as
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planned. Earned Value (EV) is the physical work completed to date and the authorized budget for that. It is also referred as BCWP (Budgeted Cost of Work Performed).

Estimate at Completion (EAC): The expected total cost of an activity, a group of activities, or of the project when the defined scope of work has been completed. Most techniques for forecasting EAC include some adjustment of the original cost estimate based on project performance to date. EAC = Actuals-to-date + ETC.

Estimate To Complete (ETC): The expected additional cost needed to complete an activity, a group of activities, or the project. Most techniques for forecasting ETC include some adjustment to the original cost estimate based on project performance to date. This is also known as Forecast Final Cost. Fixed Costs: Costs that do not change based on the number of units. These costs are nonrecurring. Life Cycle Costing: The concept of including acquisition, operating, and disposal costs when evaluating various alternatives. Also known as the total cost of ownership. Management Reserve: A separately planned quantity used to allow for future situations which are impossible to predict. ("unknown unknowns") Management reserves are intended to reduce the risk of missing cost or schedule objectives. Use of management reserves requires a change to the project's cost baseline. Parametric Estimating: An estimating technique that uses a statistical relationship between historical data and other variables to calculate an estimate. Payback Period: The number of time periods up to the point at which cumulative revenues exceed cumulative costs and, therefore, the project has turned a profit. Percent Complete (PC): The percentage of the amount of work which has been completed on an activity or group of activities. Planned Value (PV): PV is the budgeted cost for the work scheduled to be completed on an activity or WBS component up to a given point in time. It is also referred as BCWS (Budgeted Cost of Work Scheduled). Project Cost Management: A subset of project management that includes the processes required to ensure that the project is completed within the approved budget. Schedule Performance Index (SPI): The ratio of work performed to work scheduled. (BCWP / BCWS). Schedule Variance (SV): Any difference between the scheduled completion of an activity and the actual completion of that activity. In earned value, BCWP - BCWS. Value Analysis: A cost-reduction tool that involves careful analysis of a design or item to identify all the functions and the cost of each. It considers whether the function is necessary and whether it can be provided at a lower cost without degrading performance or quality. Working Capital: Current assets minus liabilities. Cost baseline refers to what is expected to be spent on the project. It is usually an S-curve. That is the expenditure is less in the beginning, and the end. The expenditure is maximum during the middle of the project. BCWS: Baseline, Scheduled or Planned Costs BCWP: Amount budgeted for the work performed ACWP: Actual Cost of Work Performed BAC: Total Budgeted Costs EAC: Estimated at Completion VAC: Variance at Completion.

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o o

The difference between the total amount the project was supposed to cost (BAC) and the amount the project is now expected to cost (EAC). VAC = BAC - EAC

CPI = BCWP / ACWP (measures efficiency) CV = BCWP - ACWP SPI = BCWP / BCWS (measures efficiency) SV = BCWP - BCWS Percent Complete (accomplished): BCWP / BAC (real value of work accomplished) Percent Spent: ACWP / BAC EAC = BAC / CPI or EAC = ACWP + ETC ETC = EAC - ACWP

The estimates for project costs can come in several forms: Analogous estimating: uses similar historical information to predict the cost of the current project. Parametric modeling: uses a parameter, such as cost per metric ton, to predict project costs. Bottom-up estimating: starts from zero and adds the expenses from bottom-up. Top-down estimating: uses a similar project as a cost baseline and factors in current project conditions to predict costs. The resources needed to complete a project may be one of the biggest expenses in the projects budget. The activities the resources complete must be worthy of the resources time. In other words, the project manager does not want to assign a $125 per hour engineer to filing activity that a $15 per hour administrative assistant is qualified to do. Accurate assignment of project resources to project activities helps prevent waste. Projects also have four different kinds of cost: Direct costs: these are costs that attributed directly to the project and cannot be shared with operations or other projects. Variable costs: costs that vary depending on the conditions within the project. Fixed costs: costs that remain the same throughout the project. Indirect costs: these costs can be shared across multiple projects that use the same resources such as training room or piece of equipment. There is one last cost, called opportunity costs. This is a special cost because it really doesnt cost the organization anything out of pocket, but rather the cost of a lost opportunity. Opportunity costs are an expense companies that complete projects for other organizations realize. When an organization that completes projects for others must forgo one project in order to complete the other, the value of the forgone project is the opportunity cost. For example, a company has two projects it can complete but it must choose only one of them. Project A is worth $75,000 and Project B is worth $50,000. If the company chooses Project A the opportunity cost is $50,000 because the company misses out on the opportunity.

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