Planned Cost as a Key Performance Indicator in Project Management

The Planned Cost is a significant Key Performance Indicator (KPI) in Project Management. This KPI represents the estimated costs that are anticipated for the execution of the project. It is crucial in managing a project's budget and ensuring that expenditures are kept within the defined limits.

Overview of Planned Cost

The Planned Cost includes all the expenses anticipated during the project such as labor costs, material costs, procurement costs, overhead costs, and any other expenses that are expected to be incurred. This KPI provides a benchmark against which actual costs can be compared, enabling project managers to manage and control project expenses effectively.

Calculating the Planned Cost KPI

The Planned Cost KPI can be calculated using the following formula:

Planned Cost KPI = Sum of Estimated Costs of All Project Tasks

In this formula:

• The Sum of Estimated Costs of All Project Tasks is the total of the costs estimated for all tasks in the project.

This KPI gives project managers a clear understanding of the projected financial scope of the project. By monitoring the Planned Cost KPI throughout the project, project managers can observe the financial progression of the project and manage resources more effectively.