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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.
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