This article contains most of the important information you need to know about Control Cost process in order to answer questions related to this topic in the PMP Exam, I recommend you review this type of articles 1 week before your exam date, all information mentioned are based on PMBOK Guide 6th edition and PMP Exam Prep 9th edition for Rita Maclhy’s, ITTO refers to Inputs, Tools & Techniques and outputs.
This process is a part of Monitor and control Process group and Cost Management Knowledge Area with the following ITTO’s
- Project management plan ( Cost management plan , cost baseline and performance measurement baseline )
- Project documents (Lessons learned register)
- Project Funding requirements
- Work Performance data
- Organizational process assets.
Tools and Techniques:
- Expert Judgment
- To Complete Performance Index
- Project Management Information system
- Data Analysis (Reserve Analysis, Trend Analysis , Variance Analysis , Earned Value Analysis )
- Work Performance Information
- Cost Forecasts
- Change Requests
- Project Management plan updates ( Cost Management Plan , Cost baseline , Performance measurement baseline )
- Project Document Updates ( Assumption log , basis of estimates , Cost estimates , lessons learned register , Risk register )
- This process includes progress reporting in order to control cost.
- It includes reserve analysis as well , analyzing whether these contingency reserves are still necessary or whether new reserves are required , if risk doesn’t occur and it is determined that the risk is no longer a threat , the contingency reserve can be removed from cost baseline.
- Analysis of management reserves may also indicate that too many unknown risk events are occurring, if an unknown risk event occurs, management reserves will pay for the workaround , a change request will be required to move those management reserves funds into cost baseline and to add any additional funds required to complete the reestimated project work with the new parameters .
- Earned Value management, Earned value is used in performance reviews to measure project performance against the scope , schedule and cost .
- The benefit of using earned value management is that it integrates cost,time and work done ( Scope ) and can be used to forecast future performance and project completion dates and costs.
- Planned Value (PV) : As of today , what is the estimate value of the work planned to be done .
- Earned Value (EV) : As of today, what is the estimated value of the work actually accomplished.
- Actual Cost (AC) : As of today , what is the actual cost incurred for the work accomplished .
- Budget at completion (BAC) : How much did we budget for the total project effort.
- Estimate at completion (EAC) : What do we currently expect the total project to cost ( Forecast )
- Estimate to Completion (ETC) : from this point on , how much more do we expect it to cost to finish the project ( Forecast )
- Variance At completion ( VAC) : As of today , how much over or under budget do we expect to be at the end of the project .
- To Complete Performance Index (TCPI ) : This term divides work remaining to be done by the money remaining to do .
- The table following should be memorized for the exam
|Cost Variance (CV)||CV = EV-AC||Negative is over budget, positive is under budget.|
|Schedule Variance ( SV)||SV = EV-PV||Negative is behind schedule, Positive is ahead of schedule|
|Cost Performance Index (CPI)||CPI=EV/AC||Greater than one is good , less than one is bad|
|Schedule Performance Index (SPI)||SPI = EV/PV||Greater than one is good , less than one is bad|
|Estimate At Completion (EAC)||· AC + ETC
· AC + ( BAC-EV)
· AC + (BAC-EV)/CPI*SPI
|To Complete Performance index ( TCPI)||(BAC-EV)/(BAC-AC)||Greater than one is bad , less than one is good|
|Estimate to Complete (ETC)||EAC-AC|
|Variance At completion (VAC)||BAC – EAC|
Earned Value Accrual,
- Discrete efforts, Describes activities that can be planned / measured for output including fixed formula.
- Apportioned Efforts , describes work that has a direct/supporting relationship to discrete work .
- Level of efforts (LOE) , describes activities without deliverables