IT Projecl managsment The Importance of project Cost Management o It is usually not difficult for It professionals to learn about project cost management; they just often are not interested in the subject. was 189% of the original estimates: improved to 45% in the 2001 study Project Cost Management
Project Cost Management 6 The Importance of Project Cost Management ◼ Cost management is another trouble spot for IT projects. ◼ IT projects have a poor track record for meeting cost goals ◼ Average cost overrun from 1995 CHAOS study was 189% of the original estimates; improved to 45% in the 2001 study ♦ It is usually not difficult for IT professionals to learn about project cost management; they just often are not interested in the subject. IT Project Management
IT Project management What is Cost? a Accountants usually define cost as a resource sacrificed or fore-gone to achieve a specific obi Many IT professionals think preparing cost W estimates is beneath them- a job for accountants giM On the contrary, preparing good cost estimates is a very demanding, important skill that all C 9 information technology project hits kl managers need to acquire Project Cost Management
Project Cost Management 7 What is Cost? ◼ Accountants usually define cost as a resource sacrificed or fore-gone to achieve a specific objective. ◼ Webster’s dictionary defines cost as “something given up in exchange.” ◼ Costs are usually measured in monetary units like dollars Many IT professionals think preparing cost estimates is beneath them- a job for accountants. On the contrary, preparing good cost estimates is a very demanding, important skill that all information technology project managers need to acquire. IT Project Management
IT Project management What is Project Cost Management? a Project cost management includes the processes required to ensure that the project is completed within an approved budget Resource planning Cc oSt estimating ost budgeting Cost control Project Cost Management
Project Cost Management 8 What is Project Cost Management? ◼ Project cost management includes the processes required to ensure that the project is completed within an approved budget ◼ Resource planning ◼ Cost estimating ◼ Cost budgeting ◼ Cost control IT Project Management
IT Project management Project Cost Management Processes Resource planning determining what resources and quantities of them should be used Cost estimating a developing an estimate of the costs and resources needed to complete a project Cost budgeting allocating the overall cost estimate to individual work items to establish a baseline for measuring performance a Cost control controlling changes to the project budget Project Cost Management
Project Cost Management 9 Project Cost Management Processes ◼ Resource planning ◼ determining what resources and quantities of them should be used ◼ Cost estimating ◼ developing an estimate of the costs and resources needed to complete a project ◼ Cost budgeting ◼ allocating the overall cost estimate to individual work items to establish a baseline for measuring performance ◼ Cost control ◼ controlling changes to the project budget IT Project Management
IT Project management Basic principles of cost management (1) Profits(利润) a are revenues minus expenses Profit margin(利润率) is the ratio between revenues and profits Life cycle costing(全寿命期成本计算) a is estimating the cost of a project over its entire Project Cost Management 10
Project Cost Management 10 Basic Principles of Cost Management (1) ◼ Profits（利润） ◼ are revenues minus expenses ◼ Profit Margin （利润率） ◼ is the ratio between revenues and profits ◼ Life cycle costing （全寿命期成本计算） ◼ is estimating the cost of a project over its entire life IT Project Management