Plan Cost Management

00:01 This module covers the plan cost management process from the PMBOK guide.

00:08 Difficulty is low because you probably do some of these things already.

00:13 Memorization is also low because there's no really new concepts that we're introducing. An exam importance is moderate because it's a planning process that helps us do the rest of our cost management activities.

00:28 Plan cost management is one of three planning processes in the project cost management knowledge area.

00:36 There's an additional process and that's control costs in the monitoring and controlling area, but of the planning process.

00:45 The plan costs management is where we start because it produces our cost management plan and we need that plan in order to be able to go on and do the rest of our cost planning and the monitoring and controlling activities. Once we've got our cost management plan, we can then go on to estimate costs, determine budget and control costs. But first, start with the plan.

01:15 The particular domain task that this process helps us understand better is Planning Task 2, which says develop the cost management plan based on the project scope, schedule resources, approve project charter and other information using estimating techniques in order to manage project costs.

01:42 The key themes of this process and this module are, well, this is the process where you develop your cost management plan.

01:52 And as we know our plans, guide us and the rest of the project team in the development of individual cost estimates and also our approved project budget.

02:04 The cost management plan will also provide guidance on how we make changes to either cost estimates or the budget and how we track if we're on budget, over budget, over budget.

02:18 There's the value in the cost management plan and as we know from the Shewhart and Deming plan, do check cycle.

02:25 First, we start with Planning, then we do what we plan to do.

02:30 Then we check that what we're doing and what we plan to do are equal.

02:34 If we find variance between the two, we act.

02:38 Let's start with our cost management plan.

02:43 The potential inputs that we could use in order to develop our cost management plan include our project management plan.

02:52 In this instance, it refers to all of the subsidiary plans and baselines and documents that could affect the development of a cost management plan.

03:03 We may also want our project charter.

03:06 It will have useful information about costs and our approach to costs on our project.

03:13 If it is a summary type of project charter, it will just contain a minimum of information about what we know at the point of project initiation about project costs.

03:24 If, however, it's a detailed and exhaustive type of project charter, it may contain a whole wealth of information about cost estimates and the project budget and how we're going to control things.

03:37 So always look to your project charter, no matter if it's summary or detailed for assistance in preparing your cost management plan.

03:45 And of course, the other two inputs which we see quite often.

03:48 Enterprise environmental factors in this case could refer to external accounting standards or tax department standards.

03:57 Anything outside the organization and project which could constrain the project and organizational process assets, those particular policies, processes and templates like your project management methodology or blank cost estimating cheat sheets that will help you do your cost management plan.

04:18 So once we have those inputs, we can then move on to selecting the right tools and techniques to apply to them to develop our cost management plan.

04:27 The first of these being expert judgment, and by now you should realize that expert judgment is the most common tool and technique used throughout the entire PMBOK guide, and you'll know that you are an expert.

04:41 Your project team members are experts, in this case members of your organization's finance team may be experts.

04:48 You choose to consult as well as well.

04:51 You may choose to consult the project sponsor and the client.

04:55 These are all relevant experts in developing your cost management plan.

05:00 You'll use a variety of analytical techniques to help you decide what is the best approach to managing cost on this project.

05:08 These analytical techniques could look at the availability of funding, external mark constraints, the risk profile about cost on your project.

05:19 All of these analytical techniques will influence your particular cost management plan.

05:26 You may also choose to run regular meetings focusing on the development of your cost management plan and invite along to these meetings, the relevant experts and other stakeholders.

05:38 You need to get their opinions and their buy in to your particular cost management plan. Don't forget that one of the key success metrics for project management is getting stakeholders to buy in and support your project. Yes, you also want their technical input and the information that's in their head, but meeting so would serve a dual purpose.

06:01 You can get that technical information and you can create buy-in and support for your project.

06:10 The single output from the plan cost management process is the cost management plan.

06:18 It's one of many plans that we use and project management.

06:22 This particular one obviously focuses on cost management.

06:27 And with this plan, we'll go on going to go on and estimate individual costs.

06:34 We're going to aggregate those into a total project cost.

06:38 We're then going to use our cost management plan to take our project schedule and develop our project budget.

06:47 We're also going to use our cost management plan to figure out how to track plan costs and actual cost and detect variance between the two. We're also going to use our cost management plan to deal with changes to either individual cost estimates or to our project budget because it's going to tell us how changes are managed.

07:10 What processes and templates we have to fulfill in order to assist changes and make changes, and how any changes that are made will be incorporated back into our cost baseline.

07:25 So in summary, the plan cost management process produces our cost management plan.

07:33 Which helps us to go on and do our individual cost estimates, development of the budget and helps us and guides us to monitor and control all aspects of our project costs.

07:47 This has been an introduction and an overview to the plan cost management process and the PMBOK guide.