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7 - PROJECT COST MANAGEMENT

Effective software project managers constantly monitor changes to evolving stakeholder requirements and
other conditions to analyze potential impact on project cost. Some changes will be in scope and require no changes
to effort allocations (and therefore cost) while other changes may be out of scope and will require changes to effort
(cost) and schedule. This is especially important for adaptive life cycle software projects because stakeholder
requirements typically evolve in a dynamic manner, and changes can occur rapidly as a project evolves. Also,
different organizations and their customers use different cost accrual methods for measuring software project
success. For example, a project deliverable may be considered as value-adding after successful integration and
verification testing, while others may consider it value-adding only after successful user acceptance testing and
product delivery into the operational environment.

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7.4.1 Control Costs: Inputs

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The inputs for controlling costs of software projects in Section 7.4.1 of the PMBOK Guide are applicable for
controlling costs of software projects.

7.4.1.1 Project Management Plan

See Section 7.4.1.1 of the PMBOK Guide.
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7.4.1.2 Project Funding Requirements

See Section 7.4.1.2 of the PMBOK Guide.
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7.4.1.3 Work Performance Data

See Section 7.4.1.3 of the PMBOK Guide.
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7.4.1.4 Organizational Process Assets

See Section 7.4.1.4 of the PMBOK Guide.
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7.4.2 Control Costs: Tools and Techniques

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The tools and techniques for controlling costs in Section 7.4.2 of the PMBOK Guide are applicable for controlling
costs of software projects, with the following modification of Sections 7.4.2.1 and 7.4.2.2, and the addition of
Section 7.4.2.7.

7.4.2.1 Earned Value Management

Earned value management, when applied to projects that produce physical artifacts, is concerned with measuring
cost and schedule progress against an overall plan for cost, schedule, and rate of generating work products. Frequent
testing and demonstration of working software increments supports use of earned-value techniques during the

©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition 135
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