Cost Management - Slides

Understand the Key Concepts of Project Cost Management

Session Objectives

Develop and Implement a Project Cost Management Plan

Aggregate cost estimates to develop a
project budget

Apply Earned Value Management System to Control Cost

How did you manage the budget of your project?

Share your experience of managing a project budget

Open Ended

The International Rescue Committee (IRC) is implementing a project in Afghanistan to provide vocational training and small business support for displaced individuals, helping them rebuild their livelihoods. The project has a limited budget funded by international donors, and maintaining financial discipline is critical to its success. The donors fear that unexpected expenses, such as additional training materials and transportation costs for trainees, may arise during the project, threatening to exceed the approved budget.

Using PMP standards for Cost Management, how would you approach planning, managing, and controlling the project budget to ensure the project remains within its financial limits? Describe the tools and techniques you would use to forecast costs, handle unforeseen expenses, and communicate budget performance to stakeholders?

IRC Project - Managing Project Budget

To manage the budget effectively, start by developing a Cost Management Plan that defines how costs will be planned, managed, and controlled. Use Analogous Estimating and Parametric Estimating to create an initial cost baseline, allocating funds to each activity or phase. Continuously monitor the budget using Earned Value Management (EVM), comparing planned costs (PV) to actual expenditures (AC) and the earned value of completed work (EV). To handle unforeseen expenses, maintain a contingency reserve and document all cost changes in a change log, ensuring approval through an established change control process. Regularly update cost forecasts and share performance reports with stakeholders to ensure transparency and alignment with financial goals. This structured approach ensures the project stays within budget while adapting to challenges effectively.

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