Project cost management

Project Cost Management (PCM) is a method that uses technology to measure cost and productivity through the full life cycle of enterprise level projects.

PCM encompasses several specific functions of project management including estimating, job controls, field data collection, scheduling, accounting and design. PCM main goal is to complete a project within an approved budget

Beginning with estimating, a vital tool in PCM, actual historical data is used to accurately plan all aspects of the project. As the project continues, job control uses data from the estimate with the information reported from the field to measure the cost and production in the project. From project initiation to completion, project cost management has an objective to simplify and cheapen the project experience.

This technological approach has been a big challenger to the mainstream estimating software and project management industries.

Project Cost Management is one of the ten Knowledge Areas outlined in the A Guide to the Project Management Body of Knowledge (aka the PMBOK Guide). It is used during the Planning and Monitoring & Controlling Process Groups.

There are 4 processes in this knowledge area including

A key technique for Project Cost Management is Earned Value Management (EVM).

The process of managing project costs is an activity for estimating costs, developing project budget and controlling spending. The project cost management process includes the following key steps:

Cost Estimation. It is the project cost management process step when the project manager cooperates with the financial department to estimate costs required for purchasing all necessary good/services and undertaking necessary activities to deliver the project. Project Cost Estimation is conducted at the planning phase. The project manager uses project cost management software to develop spreadsheets and make calculations.

Budget Determination. At this step of the cost management process, cost spreadsheets are used to develop the budget framework and determine the budget. The project manager can use project cost management software to work in collaboration with the financial department to determine items of the budget and sources of funding and then to allocate the budget. The step entails close cooperation with the project sponsor.

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