Introduction to Software Project Management

What is a Project?

• A temporary endeavor to create a unique product, service, or result.

• Examples:

o Developing new software.

o Constructing a building.

o Merging two organizations.

Project Attributes

• Has a unique purpose.

• Is temporary (has a start and end date).

• Requires resources (human, financial, technical).

• Involves uncertainty and progressive elaboration.

• Has a primary sponsor/customer.

Project Management

• Application of knowledge, skills, tools, and techniques to meet project objectives.

• Balances competing constraints:

o Scope, Quality, Schedule, Budget, Resources, Risk.

4. Foundational Elements of Project Management

The Triple Constraint (Iron Triangle)

• Scope – What needs to be delivered?

• Time – Project deadlines.

• Cost – Budget limitations.

• (Changes in one affect the others.)

Project Stakeholders

• People involved in or affected by the project:

 o Sponsor (funds the project).

o Project Manager (leads the team).

o Team Members, Customers, Suppliers, Opponents.

Project Success Criteria

1. Meets scope, time, and cost goals.

2. Satisfies the customer/sponsor.

3. Achieves business objectives (ROI, strategic alignment).

5. Programs vs. Projects vs. Portfolios

Concept Definition Example

Project Temporary, unique task. Developing a mobile app.

Program Group of related projects managed IT Infrastructure Upgrade

together. (multiple projects).

Portfolio Collection of projects/programs aligned Company-wide digital

with business strategy. transformation.

Project Management Office (PMO)

• Functions:

o Maintains project data repository.

o Provides templates, training, and tools.

o Ensures business value of projects.

o Manages reusable code libraries.

6. Challenges in Software Project Management

Key Challenges

1. Intangible & Flexible Nature

o Hard to measure progress.

 2. Changing Requirements

o Scope creep is common.

3. Complexity & Scaling Issues

o More resources ≠ faster completion.

4. Communication & Coordination

o Team collaboration challenges.

5. Risk & Uncertainty

o High failure rates in software projects.

6. Testing Limitations

o Exhaustive testing is impractical.

Technical Constraints

• Hardware/software platforms.

• Compatibility issues.

• Security concerns.

• Evolving tools and technologies.

7. Role of a Project Manager

Key Responsibilities

1. Planning & Estimation

o Define scope, schedule, budget.

2. Monitoring & Controlling

o Track progress, manage risks.

3. Leadership & Communication

o Motivate team, resolve conflicts.

4. Stakeholder Management

o Bridge gap between technical and non-technical stakeholders.

Top 10 Skills for Project Managers

1. People Skills

2. Leadership

3. Listening

4. Integrity & Ethics

5. Trust Building

6. Verbal Communication

7. Team Building

8. Conflict Resolution

9. Problem Solving

10. Priority Balancing

What a Project Manager Should NEVER Say

• "Don’t worry, it’s easier than it looks."

• "We’ll definitely come in under budget."

• "Nothing can go wrong, I promise."

8. Summary & Key Takeaways

• Projects are temporary, unique, and goal-oriented.

• Project Management balances scope, time, and cost.

• Stakeholders include sponsors, team, customers, and suppliers.

• Success depends on meeting objectives and satisfying stakeholders.

• Challenges include changing requirements, complexity, and risks.

• Project Managers need leadership, communication, and problem-solving skills.

1. Types of Activities in Projects

Projects consist of three types of activities:

Type Description Example

Simple Repetitive, labor-intensive tasks. Shoveling snow.

Complicated Requires trial-and-error, mental effort. Assembling IKEA furniture.

Complex High uncertainty, specialized skills needed. Heart surgery.

• Projects typically include:

o Many simple tasks.

o Some complicated tasks.

o Few complex tasks.

2. Organizational Cultures and Styles

Key Aspects of Organizational Culture

• Shared values, beliefs, and expectations.

• Risk tolerance and leadership style.

• Work ethic, policies, and procedures.

Factors Affecting Software Organizations

• Productivity Boosters:

o Collaborative culture.

o Access to cross-functional teams.

o Trust among team members.

• Motivational Factors:

o Challenging problems.

o Learning opportunities.

o Strong technical leadership.

3. Organizational Structures

Three primary structures:

Structure Description Pros & Cons

Functional Employees grouped by specialization Clear hierarchy. Slow

(e.g., IT, Marketing). decisions.

Matrix Employees report to both functional & Better collaboration.

project managers. Conflicting priorities.

Projectized Teams formed around projects (PM has Fast decisions. Job
full authority). insecurity post-project.

Matrix Variations

• Weak Matrix: Functional manager has more power.

• Balanced Matrix: Equal power.

• Strong Matrix: Project manager has more control.

4. Organizational Process Assets (OPAs) & Enterprise Environmental Factors (EEFs)

OPAs (Internal Influences)

• Plans, policies, procedures (e.g., templates, lessons learned).

• Standards (ISO, IEEE, SEI).

EEFs (External Influences)

• Internal: Company culture, infrastructure, HR policies.

• External: Market conditions, regulations, political climate.

5. Project Life Cycle (PLC) vs. Product Life Cycle (SDLC)

Project Life Cycle (PLC)

• Phases:

1. Initiation (Feasibility study).

2. Planning (Scope, schedule, budget).

 3. Execution (Work is done).

4. Closure (Handover & review).

• Key Features:

o Early phases = high uncertainty, low cost.

o Later phases = more resources, clearer outcomes.

Software Development Life Cycle (SDLC) Models

Model Description When to Use

Waterfall Linear, sequential phases. Clear requirements.

Spiral Iterative + risk analysis. High-risk projects.

Agile Incremental, adaptive. Changing requirements.

RAD Rapid prototyping. Fast delivery needed.

6. Adaptive (Agile) vs. Predictive (Traditional) Life Cycles

Aspect Predictive Adaptive (Agile)

Requirements Fixed early. Evolve over time.

Planning Detailed upfront. Flexible, iterative.

Delivery Single release. Incremental.

Best For Stable projects. Dynamic projects.

Agile Key Concepts

• Sprints: Short (2-4 weeks) iterations.

• Product Backlog: Prioritized work list.

• Stakeholder Involvement: Continuous feedback.

7. Composition of Project Teams

• Dedicated vs. Non-Dedicated: Full-time vs. part-time members.

• Collocated vs. Remote: Physical vs. virtual teams.

 • Specialists vs. Generalists: Depth vs. flexibility.

• Stable vs. Interim: Long-term vs. short-term roles.

Best Practices:

• No "one-size-fits-all" model.

• Balance collaboration & specialization.

8. Key Takeaways for Exam

Must-Know Concepts

✔ Organizational Structures (Functional, Matrix, Projectized).

✔ OPAs vs. EEFs (Internal vs. external influences).
✔ Project Life Cycle Phases (Initiation → Closure).
✔ SDLC Models (Waterfall, Agile, Spiral).
✔ Team Composition (Dedicated, remote, specialists).

Exam Tips

• Compare Predictive vs. Adaptive life cycles.

• Understand Matrix variations (Weak, Balanced, Strong).

• Relate organizational culture to project success.

Project Management Processes Overview

Definition of a Process

A set of interrelated actions with:

• Inputs (documents, plans, data).

• Tools & Techniques (methods, software, expertise).

• Outputs (deliverables, updates).

5 Process Groups (Universal for All Projects)

 Process Group Key Activities

Initiating Define project charter, identify stakeholders.

Planning Create project management plan (scope, schedule, budget).

Executing Perform work, manage teams, implement changes.

Monitoring & Controlling Track progress, manage risks, approve changes.

Closing Finalize deliverables, document lessons learned.

Key Point: These groups are iterative (e.g., Agile projects revisit planning frequently).

2. Project Integration Management

Purpose: Unify all processes and activities to ensure coordination.

6 Key Processes

1. Develop Project Charter

• Purpose: Authorizes the project formally.

• Inputs:

o Business Case (justification, cost-benefit analysis).

o Statement of Work (SOW) (high-level scope, deliverables).

o Agreements (contracts, MoUs).

• Outputs:

o Project Charter (includes objectives, milestones, stakeholder list).

Example:

A university approves a "Campus Store Project" via a charter, listing objectives like "Procure
supplies by Q3" and a budget of $50K.

2. Develop Project Management Plan

• Purpose: Central document guiding execution.

• Components:

o Subsidiary plans (scope, schedule, cost, quality, risk).

 o Baselines (scope, schedule, cost).

• Tools: Expert judgment, facilitation techniques.

Difference:

Project Charter Project Management Plan

Authorizes project. Details how to execute.

High-level. Comprehensive (100+ pages).

3. Direct & Manage Project Work

• Activities:

o Execute tasks (e.g., coding, testing).

o Manage resources, stakeholders, changes.

• Outputs: Deliverables, work performance data.

4. Monitor & Control Project Work

• Tools:

o Analytical Techniques (e.g., regression analysis for cost trends).

o Meetings (e.g., sprint reviews in Agile).

• Outputs: Performance reports, change requests.

5. Perform Integrated Change Control

• Purpose: Review/approve changes (e.g., scope creep).

• Steps:

1. Log change request.

2. Assess impact (cost, time).

3. Approve/reject via Change Control Board (CCB).

6. Close Project or Phase

• Activities:

o Hand over deliverables (e.g., software to client).

 o Document lessons learned (e.g., "Vendor delays caused 20% timeline
overrun").

3. Key Documents & Examples

Statement of Work (SOW) vs. Project Charter

SOW Project Charter

Describes what to deliver. Authorizes why and who.

Used in contracts. Internal approval document.

SOW Example:

"Develop a mobile app with login, payment gateway, and admin dashboard by Dec 2024."

Charter Example:

"App project approved to boost revenue by 15%. PM: Jane Doe. Budget: $100K."

4. Agile vs. Predictive (Traditional) Approaches

Aspect Predictive Agile

Change Handling Resistant. Embraces change.

Planning Detailed upfront. Iterative (sprint planning).

Documentation Heavy (e.g., Gantt charts). Light (e.g., user stories).

Agile Focus:

• Burndown charts track sprint progress.

• Daily stand-ups for team coordination.

5. Exam Tips & Mnemonics

Must-Know Concepts
✔ Process Groups (IPEMC: Initiating, Planning, Executing, Monitoring, Closing).
✔ Integration Processes (Charter → Plan → Execute → Monitor → Close).
✔ SOW vs. Charter (SOW = "What", Charter = "Why/Who").

Scenario-Based Questions

• Example: "A stakeholder requests a new feature. What process ensures minimal
disruption?"
Answer: Perform Integrated Change Control (assess impact before approval).

Introduction to Project Scope Management

Project Scope Management is a critical knowledge area in project management that

ensures all required work (and only the required work) is included to complete the project
successfully.

Key Definitions:

• Project Scope: All the work involved in creating the project's deliverables and the
processes used to create them

• Product Scope: The features and functions that characterize a product, service, or
result

• Deliverable: Any unique and verifiable product, result, or capability to perform a

service that must be produced to complete a process, phase, or project

The Six Processes of Project Scope Management

1. Plan Scope Management

Purpose: Establish how the scope will be defined, validated, and controlled

Key Inputs:

• Project charter

• Project management plan

• Enterprise environmental factors

• Organizational process assets

Tools & Techniques:

• Expert judgment

• Meetings with stakeholders

Outputs:

• Scope Management Plan: How scope will be defined, developed, monitored,

controlled, and verified

• Requirements Management Plan: How requirements will be analyzed,

documented, and managed

2. Collect Requirements

Purpose: Determine, document, and manage stakeholder needs and requirements

Key Inputs:

• Scope management plan

• Requirements management plan

• Stakeholder register

• Project charter

Tools & Techniques:

• Interviews: One-on-one discussions

• Focus Groups: Moderated discussions with stakeholders

• Facilitated Workshops: Cross-functional requirements gathering (e.g., JAD

sessions)

• Group Creativity Techniques:

o Brainstorming

o Nominal group technique

o Mind mapping

o Affinity diagrams

• Questionnaires & Surveys: For large groups

• Observations: Job shadowing

 • Prototypes: Early models for feedback

• Benchmarking: Comparing with standards

• Document Analysis: Review existing documents

Outputs:

• Requirements documentation

• Requirements Traceability Matrix (RTM): Links requirements to their origin and

tracks them throughout project lifecycle

3. Define Scope

Purpose: Develop a detailed description of the project and product

Key Inputs:

• Scope management plan

• Project charter

• Requirements documentation

Tools & Techniques:

• Expert judgment

• Product analysis

• Alternatives generation

• Facilitated workshops

Outputs:

• Project Scope Statement: Includes:

o Product scope description

o Acceptance criteria

o Deliverables

o Project exclusions

o Constraints

o Assumptions
 • Updates to project documents

4. Create Work Breakdown Structure (WBS)

Purpose: Subdivide project deliverables into smaller, more manageable components

Key Inputs:

• Scope management plan

• Project scope statement

• Requirements documentation

Tools & Techniques:

• Decomposition: Breaking down deliverables into smaller components

• Expert judgment

• Rolling-wave planning: Detailed planning for near-term work, high-level for future
work

Approaches to Create WBS:

1. Top-down: Start with largest items and break them down

2. Bottom-up: Start with specific tasks and roll them up

3. Analogy: Use WBS from similar projects

4. Mind-mapping: Visual approach radiating from core idea

Outputs:

• Scope Baseline: Approved version of:

o Project scope statement

o WBS

o WBS dictionary

• Updates to project documents

WBS Best Practices:

• Follow the 100% Rule: WBS must include 100% of the work

• Work packages should be manageable by a single person/team

 • Typically 3-6 levels deep

• Can be organized by:

o Deliverables (recommended)

o Phases

o Geographical areas

o Departments

5. Validate Scope

Purpose: Formalize acceptance of completed project deliverables

Key Inputs:

• Verified deliverables

• Work performance data

• Requirements documentation

• Requirements traceability matrix

Tools & Techniques:

• Inspection (reviews, audits, walkthroughs)

• Group decision-making techniques

Outputs:

• Accepted deliverables

• Change requests

• Work performance information

• Updates to project documents

Difference from Control Quality:

• Control Quality checks correctness

• Validate Scope checks acceptance by customer/sponsor

6. Control Scope

Purpose: Monitor status of project and product scope and manage changes
Key Inputs:

• Project management plan

• Work performance data

• Requirements documentation

Tools & Techniques:

• Variance analysis

• Reviews and meetings

Outputs:

• Work performance information

• Change requests

• Updates to:

o Project management plan

o Project documents

o Organizational process assets

Key Concepts and Differences

Scope vs. Requirements

Aspect Scope Requirements

Definition Work needed to complete the Features/specifications of the final

project product

Focus Tasks/actions Product features

Example (Job Job seeker login, job posting, Search by location, search by
Site) search functionality keyword

Types of Requirements

1. Business Requirements: High-level organizational needs (why)

2. Stakeholder Requirements: Needs of specific stakeholders (who)

3. Solution Requirements:
 o Functional: What the product must do

o Non-functional: How the product performs

4. Transition Requirements: Temporary capabilities needed for transition

Progressive Elaboration vs. Rolling Wave Planning

• Progressive Elaboration: General characteristic of projects where details become

clearer over time

• Rolling Wave Planning: Specific technique where near-term work is planned in

detail while future work remains high-level

Exam Tips and Common Pitfalls

1. Scope Creep: Uncontrolled changes to project scope (BAD)

o Prevent with formal change control process

2. Gold Plating: Adding extra features not in requirements (BAD)

3. Remember: The WBS includes all work, but does not show sequence

4. Key Documents:

o Scope management plan

o Requirements documentation

o Scope statement

o WBS and WBS dictionary

o Requirements traceability matrix

5. 100% Rule: WBS must include ALL work (no more, no less)

Project Scope Management Processes:

1. Plan Scope Management

2. Collect Requirements

3. Define Scope

↓
4. Create WBS

5. Validate Scope (ongoing)

6. Control Scope (ongoing)

WBS Example Structure:

Level 1: Project Name

Level 2: Major Deliverables

Level 3: Sub-deliverables

Level 4: Work Packages

Introduction to Project Time Management

Project Time Management is crucial for ensuring projects are completed on schedule. It
involves processes required to manage timely completion, addressing one of the most
common project challenges - meeting deadlines.

Key Challenges:

• Time is inflexible - it passes regardless of project progress

• Schedule issues are primary sources of conflict, especially in later project phases

• Cultural differences in time perception can create scheduling conflicts

The Seven Processes of Project Time Management

1. Plan Schedule Management

Purpose: Establish policies and procedures for planning, developing, managing, executing
and controlling the project schedule

Key Inputs:

• Project charter

• Project management plan

• Enterprise environmental factors

 • Organizational process assets

Tools & Techniques:

• Expert judgment

• Analytical techniques

• Meetings

Outputs:

• Schedule Management Plan: Includes:

o Project scheduling methodology

o Level of accuracy

o Units of measure

o Organizational procedures links

o Project schedule model maintenance

o Control thresholds

o Rules for performance measurement

o Reporting formats

2. Define Activities

Purpose: Identify specific actions needed to produce project deliverables

Key Inputs:

• Scope baseline (scope statement, WBS, WBS dictionary)

• Enterprise environmental factors

• Organizational process assets

Tools & Techniques:

• Decomposition

• Rolling wave planning

• Expert judgment

Outputs:
 • Activity List: Includes all schedule activities with identifiers and descriptions

• Activity Attributes: Extends activity description with predecessor/successor info,

logical relationships, leads/lags, resource requirements

• Milestone List: Significant events with zero duration (e.g., approvals, phase
completions)

3. Sequence Activities

Purpose: Identify and document relationships among project activities

Key Inputs:

• Activity list and attributes

• Project scope statement

• Milestone list

Tools & Techniques:

• Precedence Diagramming Method (PDM): Most common technique showing

activities as boxes (nodes) connected by arrows showing dependencies

• Dependency Determination:

o Mandatory (hard logic) - inherent in work nature

o Discretionary (soft logic) - based on best practices

o External - project to non-project relationships

o Internal - within project relationships

• Leads and Lags: Time advances or delays between activities

Outputs:

• Project schedule network diagrams

• Project document updates

Dependency Types:

1. Finish-to-Start (FS): Most common - successor can't start until predecessor

finishes

2. Start-to-Start (SS): Successor can't start until predecessor starts

 3. Finish-to-Finish (FF): Successor can't finish until predecessor finishes

4. Start-to-Finish (SF): Rare - successor can't finish until predecessor starts

4. Estimate Activity Resources

Purpose: Determine type and quantities of resources needed for each activity

Key Inputs:

• Activity list and attributes

• Resource calendars

• Risk register

Tools & Techniques:

• Expert judgment

• Alternative analysis

• Published estimating data

• Bottom-up estimating

• Project management software

Outputs:

• Activity resource requirements

• Resource Breakdown Structure (RBS): Hierarchical representation of resources by

category

• Project document updates

5. Estimate Activity Durations

Purpose: Approximate number of work periods needed to complete activities

Key Inputs:

• Activity list and attributes

• Activity resource requirements

• Resource calendars

Tools & Techniques:

 • Three-Point Estimating:

o Optimistic (O)

o Most likely (M)

o Pessimistic (P)

o Formula: (O + 4M + P)/6

• Analogous estimating (top-down)

• Parametric estimating

• Expert judgment

• Reserve analysis

Outputs:

• Activity duration estimates

• Project document updates

6. Develop Schedule

Purpose: Analyze activity sequences, durations, resources to create project schedule

Key Inputs:

• Activity list and attributes

• Project schedule network diagrams

• Activity resource requirements

• Activity duration estimates

Tools & Techniques:

• Critical Path Method (CPM):

o Longest path through network

o Determines shortest project duration

o Activities on critical path have zero float

• Schedule Compression:

o Crashing: Adding resources to shorten duration (increases cost)

 o Fast-tracking: Performing activities in parallel (increases risk)

• Critical Chain Method: Accounts for resource limitations

• Resource Optimization: Resource leveling and smoothing

• Modeling Techniques: What-if scenario analysis, simulation

• Gantt Charts: Bar charts showing schedule information

Outputs:

• Schedule baseline

• Project schedule (Gantt charts, milestone charts)

• Schedule data

• Project document updates

Key Concepts:

• Total Float (Slack): Time activity can be delayed without delaying project finish

• Free Float: Time activity can be delayed without delaying successor

• Forward Pass: Calculates early start/finish dates

• Backward Pass: Calculates late start/finish dates

7. Control Schedule

Purpose: Monitor project status to update progress and manage changes

Key Inputs:

• Project management plan

• Project schedule

• Work performance data

Tools & Techniques:

• Performance reviews (earned value analysis, trend analysis)

• Project management software

• Resource optimization

• Schedule compression
 • Schedule comparison charts (e.g., tracking Gantt)

Outputs:

• Work performance information

• Schedule forecasts

• Change requests

• Project document updates

• Organizational process assets updates

Specialized Scheduling Techniques

Program Evaluation and Review Technique (PERT)

• Used when activity durations are uncertain

• Uses weighted average formula: (O + 4M + P)/6

• Focuses on probabilistic time estimates

• Particularly useful for R&D projects

Critical Chain Scheduling

• Based on Theory of Constraints

• Addresses resource limitations

• Uses buffers instead of individual task padding:

o Project buffer at end

o Feeding buffers before critical path activities

• Reduces multitasking

Agile Time Management

• Emphasizes customer collaboration over contract negotiation

• Responding to change over following a plan

• Uses time-boxed iterations (sprints)

• Product owner prioritizes work

• Focus on delivering working software frequently

Practical Scheduling Tips

1. Reality Checks:

o Compare draft schedule with project charter

o Ensure detailed schedule is realistic

o Alert management early about potential delays

2. People Factors:

o Strong leadership is crucial

o Use empowerment, incentives, discipline, negotiation

o Account for different work styles and cultural attitudes

3. Software Use:

o Understand concepts before using tools

o Enter all dependencies for accurate critical path

o Update actual progress regularly

Common Pitfalls and Solutions

Pitfall Solution

Parkinson's Law (work expands to fill Use critical chain scheduling with buffers
time)

Student Syndrome (procrastination) Set intermediate milestones with

accountability

Multitasking inefficiencies Limit work in progress (WIP)

Overly optimistic estimates Use three-point estimating

Scope creep affecting schedule Implement strict change control

Project Time Management Processes:

1. Plan Schedule Management

2. Define Activities
 ↓

3. Sequence Activities

4. Estimate Activity Resources

5. Estimate Activity Durations

6. Develop Schedule

7. Control Schedule

Critical Path Example:

Start → A (5 days) → B (3 days) → D (4 days) → End

→ C (2 days) → E (6 days) → End

(Longest path: A→B→D = 12 days = Critical Path)

Introduction to Project Cost Management

Project Cost Management is a critical knowledge area that ensures projects are completed
within approved budgets. It involves planning, estimating, budgeting, financing, funding,
managing, and controlling costs throughout the project lifecycle.

Key Challenges:

• IT projects have poor track records for meeting budget goals

• Cost overruns are common (actual costs exceeding estimates)

• Ability to influence costs is greatest in early project phases

• Many organizations don't disclose resource rates to project managers

The Four Processes of Project Cost Management

1. Plan Cost Management

Purpose: Establish policies, procedures, and documentation for managing project costs

Key Inputs:

• Project charter

• Project management plan

• Enterprise environmental factors

• Organizational process assets

Tools & Techniques:

• Expert judgment

• Analytical techniques

• Meetings

Outputs:

• Cost Management Plan: Includes:

o Units of measure

o Level of precision/accuracy

o Organizational procedures links

o Control thresholds

o Rules for performance measurement

o Reporting formats

o Additional details as needed

2. Estimate Costs

Purpose: Develop approximation of monetary resources needed for project activities

Key Inputs:

• Cost management plan

• Scope baseline (scope statement, WBS, WBS dictionary)

• Project schedule

• Risk register
Tools & Techniques:

• Expert Judgment: Leveraging experience from similar projects

• Analogous Estimating: Using actual costs from similar projects (top-down)

• Parametric Estimating: Using statistical relationships (e.g., cost per unit)

• Bottom-Up Estimating: Estimating individual work items and summing

• Three-Point Estimating: Considering optimistic, pessimistic, most likely

• Reserve Analysis: Adding contingency reserves for known risks

• Cost of Quality: Considering quality-related costs

• Project Management Software: Tools for cost estimating

• Vendor Bid Analysis: Using seller bids for cost estimates

Types of Cost Estimates:

Type Accuracy Timing Purpose

Rough Order of -50% to Very early Project selection

Magnitude (ROM) +100% decisions

Budgetary -10% to 1-2 years before Budget allocation

+25% completion

Definitive -5% to +10% <1 year before Purchasing decisions,

completion final estimates

Outputs:

• Activity cost estimates

• Basis of estimates

• Project document updates

3. Determine Budget

Purpose: Aggregate cost estimates to establish an authorized cost baseline

Key Inputs:

• Cost estimates

• Basis of estimates
 • Project schedule

• Risk register

Tools & Techniques:

• Cost aggregation (summing by WBS components)

• Reserve analysis

• Expert judgment

• Historical relationships

• Funding limit reconciliation

Outputs:

• Cost Baseline: Time-phased budget for measuring performance

• Project funding requirements

• Project document updates

4. Control Costs

Purpose: Monitor project status to update costs and manage changes

Key Inputs:

• Project management plan

• Project funding requirements

• Work performance data

Tools & Techniques:

• Earned Value Management (EVM): Integrates scope, schedule, cost data

• Forecasting: Predicting future performance

• To-Complete Performance Index (TCPI): Performance needed to meet goals

• Performance Reviews: Comparing planned vs. actual performance

• Project Management Software: Tools for tracking costs

Outputs:

• Work performance information

 • Cost forecasts

• Change requests

• Project document updates

• Organizational process assets updates

Key Cost Management Concepts

Types of Costs

Cost Type Description Examples

Direct Directly related to project Team salaries, software licenses

Indirect Not directly tied to project Utilities, administrative support

Fixed Don't change with production Lease payments, salaries

Variable Change with production volume Materials, hourly wages

Sunk Already incurred, can't recover Research costs, preliminary studies

Cost Estimation Models

1. COCOMO (Constructive Cost Model)

• Algorithmic model using KLOC (thousands of lines of code)

• Three modes:

o Organic: Small, simple projects

▪ Effort (E) = 2.4*(KLOC)^1.05

▪ Development Time (D) = 2.5*(E)^0.38

o Semi-detached: Intermediate projects

▪ E = 3.0*(KLOC)^1.12

▪ D = 2.5*(E)^0.35

o Embedded: Complex projects with tight constraints

▪ E = 3.6*(KLOC)^1.20

▪ D = 2.5*(E)^0.32

2. Function Point Analysis

 • Measures software size in terms meaningful to users

• Steps:

1. Count components (inputs, outputs, inquiries, files, interfaces)

2. Apply complexity weights

3. Calculate Unadjusted Function Points (UFP)

4. Determine Technical Complexity Factor (TCF)

5. Calculate Adjusted Function Points: FP = UFP * TCF

Earned Value Management (EVM)

Key Terms:

• Planned Value (PV): Authorized budget for scheduled work

• Earned Value (EV): Budgeted cost for work performed

• Actual Cost (AC): Actual cost incurred for work performed

• Budget at Completion (BAC): Total planned value for project

Key Formulas:

Metric Formula Interpretation

Cost Variance (CV) EV - AC Negative = Over budget

Schedule Variance (SV) EV - PV Negative = Behind schedule

Cost Performance Index (CPI) EV/AC <1 = Over budget

Schedule Performance Index (SPI) EV/PV <1 = Behind schedule

Estimate at Completion (EAC) BAC/CPI Forecast of total cost

Estimate to Complete (ETC) EAC - AC Expected cost to finish

Variance at Completion (VAC) BAC - EAC Expected over/under budget

Best Practices and Pitfalls

Best Practices:

1. Use multiple estimation techniques and compare results

2. Involve team members in estimation process

 3. Document all assumptions and constraints

4. Regularly update estimates as project progresses

5. Use EVM to track performance against baseline

6. Implement strict change control procedures

Common Pitfalls:

• Optimism bias in estimates

• Failure to account for all cost components

• Ignoring non-labor costs

• Not adjusting for geographic differences in costs

• Overlooking inflation for long projects

• Not including adequate contingency reserves

Project Cost Management Processes:

1. Plan Cost Management

2. Estimate Costs

3. Determine Budget

4. Control Costs

EVM Performance Interpretation:

CV = EV - AC | Positive: Under budget

SV = EV - PV | Positive: Ahead of schedule

CPI = EV/AC | >1: Cost efficient

SPI = EV/PV | >1: Schedule efficient