Cost Management Process
First process in Project Cost Management Knowledge Area in the PMBOK.
What is Plan Cost Management?
Expended cost.
What are sunk costs?
Lowest level of accuracy: -25% to +75%
What is Rough Order of Magnitude (ROM)?
Least accurate
What is ROM?
Calculated through risk scoring
Second process in Project Cost Management
What is Estimate costs?
Costs that are associated with a specific project objective.
What are direct costs?
Second level of accuracy
What is a conceptual estimate ranging from -30% to +50%?
Used by upper management based on previous, similar project?
What is top-down estimating?
Estimated Costs + Contingency Reserve
What is the project cost baseline?
Third process in Project Cost Management
What is Determine Budget?
Costs associated with general cost of doing business.
What are indirect costs?
What is a definitive estimate?
Estimate costs per x or some variable like volume or quantity
What is parametric estimating?
Reserve that accounts for unknown risks.
What is the managerial reserve?
Fourth process in Plan Cost Management
What is Control Costs?
Costs that fluctuate.
Estimate that has -10% to +15% level of accuracy
What is a control estimate?
Estimate =
(Optimistic + 4(Most Likely)+ Pessimistic)/6
What is PERT or Three-Point Estimating?
Project Cost Baseline + Managerial Reserve
What is the project budget?