Project Cost Management System: Paradigm, Cash Flow Analysis, Types of Cost, Estimates, Tools and Techniques, Challenges, and Controlling Cost

Project Cost management System

Table of Contents
Introduction................................................................................................................................2
Paradigm of Cost management process.....................................................................................2
Cash Flow Analysis....................................................................................................................3
Types of cost...........................................................................................................................3
Types of Cost estimates.............................................................................................................3
Tools and Techniques for cost estimation plan..........................................................................4
Challenges in the cost estimation program................................................................................4
Controlling cost..........................................................................................................................5
Conclusion..................................................................................................................................5
References:.................................................................................................................................6

Introduction
Cost management plan is the integral process for the completion of the IT project without any
pitfalls. Project cost estimation plan is the amalgamation of planning process, estimation,
developing budget, and implementation of controlling parameters for reducing costs for the
approval of the final budget.
Project is dependent on three variables which are named as time, cost, and scope. Cost of the
IT project is determined against the time required to complete the activities which are
scheduled in the project scope management plan. Cost variance can be minimized by
developing the cost estimation plan because it gives the estimated values of the project so that
minimal difference of variance can occur in the planned values and the actual values of the
activities (Ogero, 2013). Implementation of controlling parameters for reducing costs helps in
the approval of final budget.
Paradigm of Cost management process
Project cost management program is designed for completing the given activities schedule
within the approved cost of the project (Huang, and Zhang, 2013). Requirement of the
stakeholders should be satisfied within the minimum budget allocated for finishing the tasks
with excellence so that overall cost of the project can be controlled. Paradigm of cost
management processes is described below:
 Cost estimation: Costs are determined according to the resources used for
accomplishing the tasks within the given deadline. Accuracy in the estimation is the
integral part of the process which helps in minimizing the cost variance. It is required
to estimate the values of the activities and resources used by examining and
monitoring their performance and market analysis (Schwalbe, 2013).
 Budget preparation: Development of the budget involves the allocation of cost to the
individual activities so that it can be completed within the baseline of time and cost.
Determining the cost of the tasks depends on measuring the performance of resources
used and time allocated for completing the given activities.
 Controlling costs: Implementation of controlling parameters for reducing costs helps
in the approval of final budget. Cost can be controlled by forecasting the resource
required for completing the activities within the minimum time. Updating of the