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Introduction


- Plan Cost Management is one of the first planning processes the Project Manager works on because of the fact that this is one of the triple constraints.
- This process is detailed from a high-level Project Charter and the preliminary project management plan.
- The Cost Management Plan has process tailoring guidelines for the different processes in the Cost knowledge area.

Inputs


- Project Management Plan: The Project Management Plan has details at the broader level about how to build the subsidiary plans. This also has details about other baselines and project objectives.
- Project Charter: The project charter has high-level budget and other constraints for development of Cost Management Plan.
- Enterprise Environmental Factors: As part of planning, external factors affecting the enterprise in the form of currency exchange rates, resource cost information from commercial databases are used.
- Organizational Process Assets: Lessons learnt, processes, policies and formats related to cost management are utilized.

Tools & Techniques


- Expert Judgment: Expertise from senior managers, consultants and SMEs are utilized during planning.
- Analytical Techniques: How to finance the project – make / buy decision, procure or lease etc. Other techniques used might be determining payback period, return on investment, internal rate of return, discounted cash flow and net present value.
- Meetings: Important tool to bring together a cross-functional team and get the best possible solution for the project context.

Outputs


- Cost Management Plan: The cost management plan details the processes involved in the cost knowledge area for this project and also the different tools and techniques relevant to the current project. It also has details about:
-> Unit of Measure
-> Level of Precision: Rounding of estimates
-> Level of Accuracy: Range
-> Control Thresholds: What variance is allowed
-> Rules for Performance Measurement

Match the Following


1. Control Threshold - a. High-level Budget
2. Enterprise Environmental Factors - b. Cost Management Plan
3. Project Charter - c. Schedule Baseline
4. Analytical Technique - d. Commercial Databases
5. Project Management Plan – e. Payback Period

Match the Following (Answers)


1. Control Threshold - b. Cost Management Plan
2. Enterprise Environmental Factors - d. Commercial Databases
3. Project Charter - a. High-level Budget
4. Analytical Technique - e. Payback Period
5. Project Management Plan – c. Schedule Baseline