Note: This post is the fourth in a series reviewing the updates in each of the 10 Knowledge Areas (KA) in the new A Guide to the Project Management Body of Knowledge, (PMBOK® Guide) Fifth Edition If you want the big picture of what’s changed in the 5th Edition, check out this earlier post.
So, what’s different in Cost Management? Yes, you guessed it (assuming you’ve been following along with my blogs): a new “Planning” process, Plan Cost Management has been added.
And I personally believe that this is an important addition as Cost Management, unlike most of the other KAs, is often less under a project manager’s direct control because costs are typically controlled by the accounting/finance department.
As a result, the PM simply gets updated cost information when it’s available. Updated cost information is often available on a different schedule than other project data. So instead of being able to provide updated scope, time and risk reports every Monday (or the first Monday of every month), we often have to wait for the financial books to be closed. For example, resulting in updated cost reports not being available until the second Wednesday of each month. Therefore, this new Process allows for the definition (and acceptance) of a realistic Cost Management Plan.
In a little more detail, there is an increased emphasis on including the risk reserve and risk contingency in the overall project budget, better integrating Risk Management into the overall project plans. Not that this is truly new, as we have always ensured that the project budget includes the risk, but the added focus on risk in the budget simply better aligns the KA with what has already been done in real-life practice.
Finally, the other significant change is the addition of a new table summarizing all the Earned Value Formulas and Calculations in a single location – a valuable study aid for anyone preparing for their PMP®. And yes, Earned Value is still a key (and in my honest opinion an important) component of Cost Management.
Bottom line, not a lot of changes in this KA, and anyone already comfortable with effective cost and budget management should have no problems adapting to Cost Management in the 5th edition. If anything, the changes made better align this edition with existing best practices.
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