~chapter 7 has discussed about Project Cost Management that important to understand the importance of project cost management which is the CHAOS studies found the average cost overrun means the additional percentage or dollar amount by which actual cost exceed estimates; ranged from 180 percent in 1994 to 43 percent in 2002. ~~Project cost management includes the processes required to ensure that the project is completed within an approved budget. Three important processes involve are; 1-cost estimating that developing an approximation or estimate of the costs of the resources needed to finish a project. A cost management plan is a document that describes how the organization will manage cost variance on the project. There are several tools and techniques for cost estimation such analogous or top-down estimate, bottom-up estimate and parametric modeling. 2-cost budgeting which allocating the overall cost estimate to individual work items to establish a baseline for measuring the performance. The WBS is a required input to the cost budgeting process to produce a cost baseline as an ultimate goal. 3-cost control that controlling changes that will occur to the project budget.~
~This chapter also focuses on the Basic principle of cost management like profits, profit margin, life cycle costing, cash flow analysis, tangible cost, intangible cost, direct cost, indirect cost, sunk cost and so on. We also focus on the Earned Value Management (EVM). EVM is a project performance measurement technique that integrates scope, time, and cost data. There are terms for EVM: planned value (PV), actual cost (AC), and earned value (EV). ~
~earned value formulas~
