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7 - PROJECT COST MANAGEMENT

Sources of input information are derived from the outputs of processes in other Knowledge Areas. Once received,
all of this information will remain available as inputs to all of the cost management processes.

Costs are estimated for all resources that will be charged to the project. This includes, but is not limited to, labor,
materials, equipment, services, and facilities, as well as special categories such as an inflation allowance, cost
of financing, or contingency costs. A cost estimate is a quantitative assessment of the likely costs for resources
required to complete the activity. Cost estimates may be presented at the activity level or in summary form.

7.2.1 Estimate costs: Inputs

7.2.1.1 cost Management Plan

Described in Section 7.1.3.1. The cost management plan defines how project costs will be managed and
controlled. It includes the method used and the level of accuracy required to estimate activity cost.

7.2.1.2 Human resource Management Plan

Described in Section 9.1.3.1. The human resource management plan provides project staffing attributes,
personnel rates, and related rewards/recognition, which are necessary components for developing the project cost
estimates.

7.2.1.3 Scope Baseline

The scope baseline is comprised of the following:
• Project scope statement. The project scope statement (Section 5.3.3.1) provides the product description,
acceptance criteria, key deliverables, project boundaries, assumptions, and constraints about the project.
One basic assumption that needs to be made when estimating project costs is whether the estimates will
be limited to direct project costs only or whether the estimates will also include indirect costs. Indirect
costs are those costs that cannot be directly traced to a specific project and therefore will be accumulated
and allocated equitably over multiple projects by some approved and documented accounting procedure.
One of the most common constraints for many projects is a limited project budget. Examples of other
constraints are required delivery dates, available skilled resources, and organizational policies.

• Work breakdown structure. The WBS (Section 5.4) provides the relationships among all the components
of the project and the project deliverables.
• WBS dictionary. The WBS dictionary (Section 5.4.3.1) provides detailed information about the deliverables
and a description of the work for each component in the WBS required to produce each deliverable.

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