HKSM
Control Costs
An ongoing process that tracks project status to revise cost forecasts and manage any changes to the approved cost baseline.
Key Points
- Compare actual spending and earned value against the cost baseline to identify variances.
- Update cost forecasts (EAC, ETC) using performance data and trends.
- Propose and implement cost baseline changes only through integrated change control.
- Recommend corrective or preventive actions to keep costs within funding limits.
Example
During a construction project, the PM finds CPI = 0.92, signaling cost overrun. The team investigates, negotiates better material prices, recalculates EAC, and submits a change request to adjust the cost baseline due to market price increases. After approval, the baseline and forecasts are updated.
PMP Example Question
While executing a project, actual costs are higher than earned value and the trend indicates a continuing overrun. What should the project manager do as part of Control Costs?
- Immediately update the cost baseline to reflect the actual costs.
- Analyze variances using EVM, update EAC, and submit a change request if a baseline adjustment is required.
- Reduce scope deliverables without approval to stay within budget.
- Do nothing until the total budget is exceeded.
Correct Answer: B — Analyze variances, update forecasts, and submit a change request if needed
Explanation: Control Costs involves assessing cost performance, forecasting outcomes, and using integrated change control to adjust the baseline when justified.
