Project Cost Management - Exam Topic
What is Project Cost Management?
Project Cost Management includes the process involved in the planning, estimating, budgeting & controlling costs so that the project can be completed within the approved budget. A project manager must:
• Estimate Costs
• Determine Budget
• Control Costs
What are “Resources”?
• Estimation involves determining
• What type of resources are required
• What resource rates
• What resource quantities
• Where will the resources come from
• Alternative strategies to obtain critical resources
What are the different Types of Costs?
Sunk Costs: A cost that has already been incurred whether action is taken or not. Sunk costs should not be considered when deciding whether to continue with a project.
Variable Costs: Any cost that changes with the amount of work e.g. materials, wages
Fixed Costs: Costs that do not change as production changes e.g. Set-up, rental etc
Direct Costs: Costs directly associated with the project
Wages, team travel, cost of materials.
Indirect Costs: Overhead items incurred for the benefit of more than 1 project. Examples include Taxes, cleaning, lighting and so on.
Remember, Project Cost Management is a commonly asked question in the PMP® Exam. In order to achieve the PMP® certification a project manager must be familiar with the Project Cost Management.
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