Figure Inputs Tools and Techniques in Cost Management
PMBOK v8 Definition
In PMBOK v8, "Figure Inputs Tools and Techniques and Outputs" refers to the standardized visual framework used to document and communicate the relationships between inputs, tools and techniques, and outputs for each project management process. Within the Cost Management knowledge area, this framework is applied to four key processes: Plan Financial Management (Figure 2-27), Estimate Costs (Figure 2-28), Develop Budget (Figure 2-29), and Monitor and Control Finances (Figure 2-30). These processes belong to the Finance Performance Domain.
Why It Matters for the Exam
The PMI exam frequently tests your ability to correctly identify which inputs, tools, and outputs belong to each specific cost management process. Questions often present a scenario where you must select the correct tool for a given process or recognize which output is produced by Estimate Costs versus Develop Budget. Understanding these figure structures is essential for answering process-group sequence questions and ITTO (Inputs, Tools, Techniques, Outputs) recognition items.
Key Points to Remember (for the exam)
- Main Input for Plan Financial Management: Project charter and project management plan (specifically the scope baseline and schedule baseline)
- Main Output of Estimate Costs: Activity cost estimates and basis of estimates
- Key Tool for Develop Budget: Cost aggregation and funding limit reconciliation
- Main Output of Develop Budget: Cost baseline and project funding requirements
- Key Tool for Monitor and Control Finances: Earned value analysis and variance analysis
- Common Confusion: Estimate Costs produces activity-level estimates, while Develop Budget aggregates these into the cost baseline
- Critical Distinction: Plan Financial Management establishes the policies and procedures BEFORE any cost estimating occurs
Typical PMI Exam Example
A project manager is preparing the cost baseline for a construction project. She has completed activity cost estimates for all work packages. Which process should she perform next to aggregate these estimates and establish the cost baseline? Answer: Develop Budget (Figure 2-29). The exam tests the sequential relationship: Estimate Costs → Develop Budget → Monitor and Control Finances.
PMI Exam Traps
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Trap: Confusing "Estimate Costs" with "Develop Budget" outputs
- Reality: Estimate Costs produces activity-level cost estimates; Develop Budget produces the cost baseline and project funding requirements
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Trap: Thinking cost management starts with Estimate Costs
- Reality: Plan Financial Management (Figure 2-27) must be completed first to establish the framework, format, and policies
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Trap: Assuming the cost baseline includes management reserves
- Reality: The cost baseline includes contingency reserves but NOT management reserves; management reserves are added separately to create the project budget
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Trap: Confusing tools used in Estimate Costs versus Monitor and Control Finances
- Reality: Estimate Costs uses analogous, parametric, and bottom-up estimating; Monitor and Control uses earned value management and variance analysis
Important PMI Connections
| Related Concept | Relationship Type | Exam Attention Point |
|---|---|---|
| Schedule Baseline (Figure 2-22) | Input to Develop Budget | The schedule provides the timing for when costs are incurred and when funding is needed |
| Scope Baseline | Input to Estimate Costs | Work breakdown structure (WBS) provides the framework for bottom-up estimating |
| Risk Register | Input to Estimate Costs | Identified risks may require contingency reserves in cost estimates |
| Resource Management (Figure 2-41) | Complements Cost Management | Resource rates and availability directly impact cost estimates |
| Monitor and Control Schedule (Figure 2-24) | Parallel Process | Schedule and cost variances are analyzed together using earned value management |
Quick Review Questions
- Which process produces the cost baseline as its primary output?
- What is the difference between contingency reserves and management reserves in the context of Develop Budget?
- Which tool in Estimate Costs uses historical data from similar projects to approximate costs?
- During Monitor and Control Finances, what technique compares actual costs to the cost baseline to identify variances?
- Which input to Plan Financial Management ensures the cost management approach aligns with organizational policies?
PMBOK v8 Reference
Section 2.8 – Finance Performance Domain Figures 2-27 through 2-30: Plan Financial Management, Estimate Costs, Develop Budget, and Monitor and Control Finances Inputs, Tools and Techniques, and Outputs