This thesis deals with several aspects of project cost management with a focus on “Cost Trend Analysis”. First it shall give the reader a short explanation of the term “cost management” and the necessity of this process. In addition to that, the text describes the three steps of cost management in projects. Those are cost estimating, cost budgeting and cost control. The cost control tool “Cost Trend Analysis” is described and reviewed in more detail so that the reader gets the ability to create a critical view individually. Finally the thesis summarizes the findings in a conclusion.
It is no rarity, that the costs of a project exceed pre-estimated budgets. The origin of this exceeding often lays in the complexity of estimating, budgeting and controlling costs. Therefore cost management is an inevitable part of project management.
Table of Contents
1 Introduction
2 Term “Project Cost Management”
3 Phases of Project Cost Management
3.1 Cost Estimating
3.2 Cost Budgeting
3.3 Cost Control
4 Cost Trend Analysis
4.1 Structure
4.2 Review
5 Conclusion
Project Objectives and Key Topics
This thesis examines the essential processes of project cost management, aiming to provide a clear understanding of how costs are estimated, budgeted, and controlled throughout a project's lifecycle, with a specific focus on the Cost Trend Analysis (CTA) tool.
- Fundamentals of project cost management
- Methods for cost estimation and budgeting
- Mechanisms of project cost control
- Detailed analysis and evaluation of Cost Trend Analysis
- Application and review of project cost management tools
Excerpt from the Book
3.1 Cost Estimating
The phase of cost estimating takes place in advance of the operational work in the project. To evaluate how many costs will occur during the project, the sum of expenses has to be estimated. Estimations are mostly measured in units of currency, staff hours or staff days.
At the very beginning of a project the estimation is difficult, because there is only little information on which estimations can be based on. At this time the accuracy of ratings reach from -50 to +100% related to the overall costs at the end of a project, the PMBOK says. At a later point of time in the project, when more information and experiences are available, the accuracy lays between -10 and +15%. It shows that cost estimating is not only a process at the beginning of the project, but rather an on-going process.
The contrariness of cost estimations is that on one hand the costs should not be estimated too high so that the project is as efficient as possible. On the other hand ratings being too low are not good as well because cost buffers are not included then. Those are important if delays should occur during the project.
Summary of Chapters
1 Introduction: This chapter highlights the challenges of cost management in projects and outlines the thesis structure regarding the three steps of cost management and the Cost Trend Analysis tool.
2 Term “Project Cost Management”: This chapter breaks down the concept into "Cost" (types of expenses) and "Management" (the cycle of planning, realization, monitoring, and control).
3 Phases of Project Cost Management: This chapter categorizes the management process into three distinct phases: cost estimating, cost budgeting, and cost control.
4 Cost Trend Analysis: This chapter explores the Cost Trend Analysis (CTA) as a specialized tool for anticipating total project costs and provides a critical review of its application.
5 Conclusion: This chapter synthesizes the main findings, reiterating that cost control is a continuous process and noting the subjective limitations of the Cost Trend Analysis tool.
Keywords
Project Cost Management, Cost Estimating, Cost Budgeting, Cost Control, Cost Trend Analysis, CTA, PMBOK, Project Planning, Financial Management, Cost Variances, Budgeting Methods, Project Progress
Frequently Asked Questions
What is the primary focus of this work?
The work provides an overview of project cost management processes and examines the "Cost Trend Analysis" tool as a method for controlling project finances.
What are the central themes of the document?
The central themes are the three pillars of cost management: cost estimation, cost budgeting, and cost control, along with the specific practical application of CTA.
What is the core objective of this thesis?
The objective is to explain the necessity of systematic cost management and to enable the reader to critically evaluate the effectiveness of the Cost Trend Analysis tool.
Which scientific approach is utilized?
The author employs a literature-based analysis of standard project management frameworks, such as the PMBOK, combined with an examination of specific management tools.
What topics are discussed in the main body?
The main body details the components of project costs, the distinction between top-down and bottom-up budgeting, the process of monitoring cost variances, and the structural application of Cost Trend Analysis.
How would you characterize this work through keywords?
The work is characterized by terms such as Project Cost Management, Cost Trend Analysis, Financial Planning, and Budget Control.
Why is the estimation of "current project value" considered difficult in CTA?
It is subjective because it requires project members to accurately assess the value of work completed to date, which can lead to inaccuracies if not carefully communicated.
In what way does the "top-down" budgeting approach differ from the "bottom-up" approach?
Top-down starts with a total summary budget distributed to work packages, whereas bottom-up aggregates individual work package budgets to arrive at the total project budget.
- Arbeit zitieren
- Anonym (Autor:in), 2015, Project Cost Management and Cost Trend Analysis, München, GRIN Verlag, https://www.hausarbeiten.de/document/309401
