Keeping project costs under control can feel like swimming against the current sometimes.
To prevent you from going up the creek without a paddle, a Cost Management Plan is the guiding document which allows you to take fast, decisive action when issues arise and the sharks are circling.
The Project Cost Management Plan is the component of the overall Project Management Plan which deals with project costs. It provides details of how the project costs will be estimated, tracked, and controlled.
The project manager’s ability to influence project costs starts high and decreases as the project goes on. Hence the planning stage is the right time to consider how project issues will be dealt with.
- Labor rates
- Material costs
- Tools and Equipment costs
- Subcontractor budgets
- Services that must be procured
- Strategies for contingencies
- Strategies to prevent unnecessary cost escalation
- Whether equipment will be financed: Purchased, Leased, or Rented
- Insurance requirements
- Financing and interest requirements
- The person responsible for estimating
- The person responsible for reviewing and/or approving estimates
- Milestones at which the estimates will be revisited and re-approved
- Source of the estimates. For example, published commercial information
- The person who will approve the final project cost
- The processes and procedures that will be used to produce the estimates
- Any special circumstances under which the estimates be revised
- Processes and procedures to revise estimates
- Communication with funding sources
- Amount of contingency to include in each task
- Quantity of Management Reserve
- Project methodology, assumptions, and/or background information
- How the project costs will be measured
- Who will measure the costs
- How often they will be measured and/or input into software
- Person who will approve changes to project costs
- How purchases will be made
- Measurement of project performance
- Production of performance reports
- Communication of performance reports
- Which Earned Value variables will be reported
- Who the earned value analysis will be reported to
- Typical corrective actions based on earned value variables
Use this checklist to make sure you have a good handle on project costs, and don’t get stuck up the creek without a paddle too.