How a cost plan can assist in managing costs and its use over the project life cycle?
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DefinitionCost planning and control is the estimation of costs, the setting of an agreed budget, and management of actual and forecast costs against that budget. Definition from APM Body of Knowledge 7th edition Cost planningCost planning is an essential part of the project management process. Project managers need to understand where costs fall in their schedule to manage demand for resources. Typically, all resources that consume costs will be included in a resource optimised schedule. This type of schedule is essential to cost planning, to help build up picture of planned costs over time. Planned costs can be fixed or variable. A fixed cost happens once in the life of a project, for example, a machine setup. A variable cost happens more than once over the life of a project, for example, component machining. Abridged from APM Body of Knowledge 7th edition Cost controlCost control is the process of collecting actual costs and collating them in a format to allow comparison with project budgets. Cost control is necessary to keep a record of monetary expenditure for purposes such as:
Cost control information is fundamental to the lessons learned process, as it can provide a database of actual costs against activities and work packages that be used to inform future projects. APM’s Planning, Scheduling, Monitoring and Control (2015) APM ACostE Estimating GuideEverything you need to know about estimating in one essential guide. Estimates are critical to project professionals; vital when making informed decisions about projects across the different stages of the entire project life cycle to ensure successful project delivery. Buy from bookshop Cost breakdown structureCost budgets usually start with a procurement strategy and the cost breakdown structure (CBS). The CBS defines the level at which costs will be collected. Its purpose is to allow budgets to be set and costs to be collected, recorded and controlled. APM's Planning, Scheduling, Monitoring and Control (2015) Diagram: Cost breakdown structure (CBS). Copyright APM Planning, scheduling, monitoring and controlPlanning, Scheduling, Monitoring and Control offers practical guidance on all planning aspects of preparing to undertake a project, executing a project, controlling its delivery to budget, time and quality, and delivering it safely. Buy from bookshop APM Planning, Monitoring and Control Specific Interest GroupThe generic area of operation is project control, focusing on the techniques and processes listed as well as interfaces to other subject areas, e.g. risk, governance, programme and portfolio management. Get involved in the community APM Body of Knowledge 7th editionThe APM Body of Knowledge 7th edition is a foundational resource providing the concepts, functions and activities that make up professional project management. It reflects the developing profession, recognising project-based working at all levels, and across all sectors for influencers, decision makers, project professionals and their teams. Buy from the bookshop You may also be interested inThe APM Learning portal is an online resource which provides members with access to digital guides, modules and other digital learning resources as part of the membership benefit. Browse our popular project management 'What is ...?' topics for definitions, quick insights, view related case studies, research, blogs and glossary. Project – APM's official journal – is circulated quarterly for members only, and online for regularly updated news, blogs, opinions and insights for those in the project community. The APM Community is our online community platform that connects our members faster and easier than ever before. How does cost management plan benefit the project manager?A cost management plan is a document that helps you map and control a budget. It enables project managers to estimate their costs, allocate resources to the right areas, and control overall spending. Cost management plans keep all project costs in one place, including direct and indirect costs.
What is the importance of cost planning in a certain project?Cost planning is an essential part of the project management process. Project managers need to understand where costs fall in their schedule to manage demand for resources. Typically, all resources that consume costs will be included in a resource optimised schedule.
How do we keep costs under control in project cost management?The following are a few ways to successfully manage a project budget and maintain cost control:. Capture the entire scope in your WBS Statement.. Insist on input and collaboration from outside stakeholders.. Determine the cost categories used in the organization.. Develop a project management team trust.. Take action immediately.. How can a project be managed in a cost effective way?4 Tips for Effective Project Cost Management. Proper Estimates for Sound Project Cost Management. ... . Choosing Right People is Key to Managing Costs. ... . Project Control via Earned Value Analysis. ... . Less important things come second.. |
