Cost management

Costs and Cost Management

Project Cost Management includes the processes required to ensure that the project is completed within the approved budget.

Project cost management is primarily concerned with the cost of the resources needed to complete project activities.

• However, project cost management should also consider the effect of project decisions on the cost of using the project’s product.

For example, limiting the number of design reviews may reduce the cost of the project at the expense of an increase in the customer’s operating costs.

Life-cycle costing

The broader view of project cost management is often called life-cycle costing.

Lifecycle costing together with Value Engineering techniques are used to reduce cost and time, improve quality and performance, and optimize the decision-making.

Project cost managementProject cost management will include

additional processes and numerous general management techniques such as return on investment, discounted cash flow, payback analysis, and others.

Project cost management should consider the information needs of the project stakeholders—different stakeholders may measure project costs in different ways and at different times.

Project Cost Management Process

All processes interact with each other and with the processes in the other knowledge areas as well.

Each process may involve effort from one or more individuals or groups of individuals, based on the needs of the project.

Each process generally occurs at least once in every project phase.

Project Cost Management Processs

Resource Planning—determining what resources (people, equipment, materials and what quantities of each should be used to perform project activities.

Cost Estimating—developing an approximation (estimate) of the costs of the resources needed to complete project activities.

Cost Budgeting—allocating the overall cost estimate to individual work activities.

Cost Control—controlling changes to the project budget.

Program Management

A coordinated portfolio of projects that change organizations to achieve benefits of strategic importance.

Program Management has evolved from the complexities of the more aspects of Project Management.

Program Management engaged on relating design concepts to the business strategic vision of the future.

Project Management

Program management is the process of managing multiple on going projects. An example would be that of designing, manufacturing and providing support infrastructure for an automobile make.

Project Management focused on technical delivery

Managing Processes

• As a software project manager, you become the key player in a software project.

• You not only manager the day-to-day activities of the project but also ensure that the software product is delivered on time.

• What makes your role challenging is the performance of project-related activities within a specified budget and time constraint.

• At the same time, you need to keep the requirements and specifications of the customer in mind.

• To deliver expected results, you carry out three successive processes: studying the

• feasibility of the project, planning to meet the requirement, and executing the plan.

• These processes can be further broken down into activities, such as planning, staffing, and monitoring.

• These processes can be further broken down into activities, such as planning, staffing, and monitoring.

• You plan and organize the software development team to complete development within the stipulated time and budget.

• To do this, you form a team of people who have the required technical skills.

• Then, you ensure that all activities are carried out as planned by the relevant people.

The primary softwareproject management areas that you need to concentrate on include:

• Managing Resources• Managing Cost• Managing Risk• Managing Schedule• Managing the project plan• Managing quality

Managing Resources

• The primary input required to create software are resources.

• Resources for a software project may be of three kinds: human, hardware, "and software.

• Human resource management is about effectively identifying the people with the appropriate skills, assigning roles and responsibilities to these people, and establishing reporting relationships.

• On the other hand, hardware and software resource management relates to identifying and ensuring resources such as workstations, disk space on servers, software tools, and software licenses.

• To manage resources effectively, there are two areas that you require your attention. These include:

• Your responsibilities include analyzing customer requirements, determining the scope of the software project, allocating resources top the project, scheduling the project, and executing the project.

• These responsibilities can be considered in terms of the areas where management skills are required.

• Management of human resources also requires efficient team development.

• To manage human resources, you also need to implement a reward and recognition system. This helps in promoting and reinforcing positive performance.

Managing Cost

• The cost factor has a considerable influence on the execution of a software project.

• The budget of a software project is affected by factors, such as the current orientation of the organization toward software development, number of skilled personnel available, infrastructure, and computer hardware and software.

• The budget can also be influenced by timely availability of resources.

• If a particular resource is allocated to the project later than required, the costs involved could go up drastically.

• To manage costs for software projects, you need an accurate estimation of costs.

• To do that, there is a sequence of steps that you need to perform.

• Identify the resources required for the project• • Estimate the cost of each activity• • Set cost baselines for each activity• • Implement a control system for cost changes

Management Risk

• Risk management is an integral part of project management.

• Risk on a small scale is acceptable to most project managers as the element of loss is minimal.

• Risk management activities involve identifying potential risks, assessing them, and planning for contingent actions if a risk materializes.