Define the most efficient cost budgeting process in project management?

Generally a project cost management aims to ensure that the project is completed within the approved budget. It is primarily concerned with the cost of the resources needed to complete project activities.

It is also called life-cycle costing.

It provides an overview of the following major processes:

1 Resource Planning—determining what resources (people, equipment, materials) and what quantities of each should be used to perform project activities.

2 Cost Estimating—developing an approximation (estimate) of the costs of

the resources needed to complete project activities.

Here some basic examples of tools & techniques used in this phase

2.1 Analogous estimating.  Analogous estimating, also called  top-down estimating,

means using the actual cost of a previous, similar project as the basis for estimating

the cost of the current project.

2.2 Parametric modeling. Parametric modeling involves using project characteristics

(parameters) in a mathematical model to predict project costs

2.3 Bottom-up estimating. This technique involves estimating the cost of individual

work items, then summarizing or rolling-up the individual estimates to get a project total.

2.4 Computerized tools. Computerized tools such as project management software and

spreadsheets are widely used to assist with cost estimating

3 Cost Budgeting—allocating the overall cost estimate to individual work items.

4 Cost Control—controlling changes to the project budget.

 Futher I have to list the most common forecasting techniques of a total project costs based on project performance, an estimate at completion (EAC).

• EAC = Actuals to date plus the remaining project budget modified by a performance factor

This approach is most often used when current variances are seen as typical of future variances.

• EAC = Actuals to date plus a new estimate for all remaining work. This approach is most often used when past performance shows that the original estimating assumptions were fundamentally flawed, or that they are no longer relevant due to a change in conditions.

• EAC = Actuals to date plus remaining budget. This approach is most often used

when current variances are seen as atypical and the project management team’s

expectation is that similar variances will not occur in the future.

 

 

 

 

ABC costing 

EVM or Bottom-up sums of tasks costs

In my opinion, the best method to put the standards based on engineering, The should know what the cost should be after whole investigation and studies.

I believe it is bottom-up estimation. It is very detailed process, needs more time but highly realistic.

Many businesses employ cost management plans for specific projects, as well as for the over-all business model. When applying it to a project, expected costs are calculated while the project is still in the planning period and are approved beforehand. During the project, all expenses are recorded and monitored to make sure they stay in line with the cost management plan. After the project is finished, the predicted costs and actual costs can be compared and analyzed, helping future cost management predictions and budgets. Implementing a cost management structure for projects can help a business keep their over-all budget under control. Several business intelligence (BI) programs, such as Oracle Hyperion, offer cost management software to help businesses monitor costs and increase profitability. While the software may help, it is not imperative that software is used when executing a cost management plan. Vendors may refer to cost management software applications as cost accounting, spend management or cost transparency products. See also: IT MOOSE management, IT chargeback system, capacity planning, Project Management Office (PMO), advanced planning and scheduling (APS) Learn more about cost management: Cost Management Analysis Guide Bernie Klinder describes how standardizing hardware to create a common desktop environment can keep costs down in a well managed Windows environment. How a cost management analysis affects Windows Server2008 migration In order to calculate ROI for a Windows migration, you need some "hard savings numbers." In other words, you need to find areas where you can cut existing costs in your cost management analysis. Spend management software, cost transparency tools help CIOs cut costs For enterprise organizations with sprawling global operations, spend management software and cost transparency tools can help CIOs gain insight into spending and cost-cutting opportunities. IT project management: The cost estimating processThe cost estimating process begins by breaking the project down into work phases such as design, engineering, development, and fabrication.

In my opinion it provides an overview procceses 

-Resource Planning,

-Cost Estimating,

-Analogous estimating,

-Parametric modeling,

-Computerized tools,

-Bottom -up estimating,

-Cost Control,

-Cost Budgeting.

labor cost is most