Cost Management Knowledge Area in PMP Exam

All projects need money, there is no doubt in here. If this is the case we should discuss more about the money that it takes for projects to fulfill themselves. Therefore there's no wonder that cost management is an important aspect of PMP Exam. To manage costs we need to understand that how we conduct the processes of projects around those money, how we're going to apply our job. Controlling and using the funds of your organization for a project is a part of being a project manager. Therefore this knowledge area are one of the important ones for preparing the PMP Exam.

Senior management always want to track the project. Especially in terms of cost. In the scope of cost management earned value analysis is one of tools that are used to evaluate if your projects on track needless to say budgets and cost controls are key responsibilities for your role as project manager or scrum master. Considering that many projects fail due to exceeding costs, the sensitivity of senior management is very understandable and it should also be project manager's sensitivity. Additionally projects that fail due to cost considerations, usually fail in a destructive way. Therefore costs of the project should be managed closely.

Some management only wants to see project progress communicated in terms of one simple thing. Another key principle for cost management is cost value engineering. Cost value engineering refers to getting more out of a project without sacrificing scope. As a project manager, all the thing we have to do is estimating, budgeting and controlling costs. Therefore it's project manager's responsibility to assure that project will be completed within the approved budget.

There are four process in cost management knowledge area, three of them are in planning process group and one of them falls under monitoring and controlling process group.