PMI pdu courses need to contain information on tools for cost management. At this point, the project manager should have a list of the resources and the cost needed to complete the activities. In this section, the use of various tools and techniques will help the project manager determine the budget for his or her project. This budget will serve as the baseline for measuring project performance in the area of cost control. The following tools and techniques are ways to determine the budget by analyzing the resources, work package activities, planned, and unplanned risks. To earn PMI pdus the student should understand the following:
The cost estimates for each work package is consolidated as indicated by the work breakdown structure. The higher-level structures allow for assigning cost accounts to each component, which in the end will represent the budget for entire project. PMI PDU courses should include cost aggregation.
The cost of managing risk and changes to scope are factored into the budget. Contingency reserves are funds reserved for planned risks identified on the risk register. On the other hand, management reserves are funds set aside for unplanned changes to the scope and cost of the project. While Management reserves are include in the total project budget, they are not included in the project baseline, nor is it included in the earned value calculations discussed later in the course. To earn PMI PDUs the student should demonstrate understanding of this.
Expert judgment relies on the expertise of an individual or group that has extensive knowledge, skill, training, etc for a particular activity being performed. The expert is able to help determine the budget and may come from the following areas as resources:
- Other project teams in the organization
- External consultants
- Professional associations
- Groups within an industry
A project manager may use historical relationships resulting from parametric or analogous calculations that produced a mathematical model that can be used to predict project costs. An example of this is the price per square feet to build a home. PMI PDU courses should include the following: The reliability of the model depends on the following factors:
- The information used to create the model is accurate
- The model parameters are easily quantifiable
- The mathematical model is easily applied to projects of any size and scale