Project Cost Management Plan Template
This Project Cost Management Template is free for you to copy and use on your project
and within your organization. We hope that you find this template useful and
welcome your comments. Public distribution of this document is only permitted
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Table of Contents
Cost Management Approach 2
Measuring Project Costs 3
Reporting Format 5
Cost Variance Response Process 5
Cost Change Control Process 5
Project Budget 5
The Cost Management Plan clearly defines how the costs on a project will be managed throughout the project’s lifecycle.It sets the format and standards by which the project costs are measured, reported and controlled. The Cost Management Plan:
• Identifies who is responsible for managing costs
• Identifies who has the authority to approve changes to the project or its budget
• How cost performance is quantitatively measured and reported upon
• Report formats, frequency and to whom they arepresented
The Project Manager will be responsible for managing and reporting on the project’s cost throughout the duration of the project. During the monthly project status meeting, the Project Manager will meet with management to present and review the project’s cost performance for the preceding month. Performance will be measured using earned value. The Project Manager is responsible foraccounting for cost deviations and presenting the Project Sponsor with options for getting the project back on budget. The Project Sponsor has the authority to make changes to the project to bring it back within budget.
Cost Management Approach
This section you explain your approach to cost management for your project.
We chose to create Cost Accounts at the fourth level of the WBS as anexample since many project management offices don’t have a Project Management Information System. If you are using a Project Management Information System then you can, and should, manage costs down to the work package level. For those who don’t have a Project Management Information System you’ll want to determine which level of the WBS you can most effectively manage the project’s costs from. Thefurther down in the WBS you go, the more detailed your cost management is. However, you should balance the granularity at which you want to manage costs against the amount of effort it takes to manage at that level. The more granular your cost management, the more work is necessary to manage it.
Costs for this project will be managed at the fourth level of the Work Breakdown Structure (WBS).Control Accounts (CA) will be created at this level to track costs. Earned Value calculations for the CA’s will measure and manage the financial performance of the project. Although activity cost estimates are detailed in the work packages, the level of accuracy for cost management is at the fourth level of the WBS. Credit for work will be assigned at the work package level. Work started onwork packages will grant that work package with 50% credit; whereas, the remaining 50% is credited upon completion of all work defined in that work package. Costs may be rounded to the nearest dollar and work hours rounded to the nearest whole hour.
Cost variances of +/- 0.1 in the cost and schedule performance indexes will change the status of the cost to cautionary; as such, those valueswill be changed to yellow in the project status reports. Cost variances of +/- 0.2 in the cost and schedule performance indexes will change the status of the cost to an alert stage; as such, those values will be changed to red in the project status reports. This will require corrective action from the Project Manager in order to bring the cost and/or schedule performance indexes below the alert...