Page 132 -

7 - PROJECT COST MANAGEMENT

7.1.2 Plan Cost Management: Tools and Techniques

The tools and techniques in Section 7.1.2 of the PMBOK Guide are also applicable for planning cost management
®
for software projects, with the modifications to Sections 7.1.2.2 and 7.1.2.

7.1.2.1 Expert Judgment

See Section 7.1.2.1 in the PMBOK Guide.
®

7.1.2.2. Analytical Techniques
7
Some organizations use analytical techniques to establish decision thresholds and financial control limits to
be used as inputs for planning cost management for software projects. Historical data from predictive life cycle
software projects are typically analyzed using statistical techniques. Performance data from adaptive life cycle
software projects are collected and analyzed for each cycle of software development.

7.1.2.3. Meetings

After the preliminary cost management plan is drafted and proposed control limits are established, a meeting is
typically held with the project sponsors to reach agreement on the cost management plan.

7.1.3 Plan Cost Management: Outputs

®
The outputs in Section 7.1.3 of the PMBOK Guide are also applicable as outputs from planning cost management
for software projects, with the following modification to 7.1.3.1. In addition, the outputs in Sections 7.1.3.2 through
7.1.3.4 also apply to planning software project cost management.

7.1.3.1 Cost Management Plan

The cost management plan for a software project typically includes the accuracy of the cost estimate, units of
measure, and the cost performance measurement methods to be used.

7.1.3.2 Accuracy of Estimate

Software estimation is error-prone; predicting the accuracy of an estimate is difficult because of the many
factors that can affect an estimate. The values of many of these factors are unknown during initial planning. A
rough order-of-magnitude preliminary estimate is typically generated during the initiation phase of a software
project, when requirements are immature, the actual parameters of software development are being formulated,
and the development team may or may not have been identified. Estimation accuracy can deviate by as much as
±150% or more at this point. Productivity, skills, and motivation are widely variable among software developers,
so effort data from previous projects may not be directly applicable as a basis of estimation. A budgetary estimate

©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition 123
®