This article will help you better understand the cost management plan. Excel provides us with the cost management plan template that makes it much easier to control, estimate and allocate the cost of the project. It ensures that the project cost will keep within the budget. It actually decides about the cost estimated, funded, and controlled.
The cost management plan template is of great use for the small as well as the complex type of businesses as all the success of your project is dependent on it. If the cost of your project exceeds the set budget your project may be ceased or get postponed.
What is Cost Management Plan?
A project cost management plan defines as the outline of cost allocation, estimation as well as control in order to complete all the activities of the project. The project planning phase has an integral part known as cost management planning that serves as a foundation for any project.
There are some important things that must include in the cost management plan template.
- Level of precision is the main focus that keeps you away from any kind of deviations in the cost estimation for example rounding off the decimal values because they will lead you towards deviation
- Units of measurement should be accurate for example the amount, quantity, or dimension, etc. as if there will be a slight difference in the size there exist a variation in the cost of production.
- Management of the control threshold is very necessary. Control threshold is actually the regulation of minimum and maximum costs
- Rules are set for the measurement of performance. It helps you analyze the earned value as well. You have to pay the employee according to their part in the progress of the project. Salaries of the employee constitute the major part of the budget.
- It is important to establish the reporting format for your project. Regular reporting is the key to determine the possible deviations in costs of the project
Download: Project Management Plan Template
Advantages of The Cost Management Plan Template
There are a lot of benefits of the cost management plan template, such as
- It enables you to identify the responsible person for the management of cost
- This also determines the authority that approves any changes in the budget
- It allows you to measure and report the cost performance quantitatively.
- This specifies the formats for the reports, frequency and mentions the person to which it has to submit.
- With the help of this template, the cost is very effectively estimated and allocated.
A project manager is responsible for the management of the cost throughout the project lifecycle. It must be a challenging task for him. He is responsible for accounting for the deviations in the cost performances and find the possible ways or take the possible decision to get everything back on the budget.
Article: Project Implementation Plan Template
Key Components of Project Cost Management Plan Template
The cost management plan template provides you with ways so that you can easily control, estimate or allocate the cost of your project in an effective way. This helps you to accomplish your project within the given budget. The cost project management template makes this task far easier for you.
This is a user-friendly template and can customize according to the needs of your project. It generally has a following standard format
Related Article: Construction Cost Estimate Template Excel
Cost Variance Plan
Cost variance plans include the evaluation of the financial activities of your project. It provides a comparison between the set budget and what was spent. It can the determined by subtracting the budgeted cost of work performance (BCWP) from the actual cost of work performed (ACWP).
Cost Management Approach
In this section, you will discuss the approaches toward project cost management. In the case of WBS (Work Breakdown Structure Template), the cost is accounted for in the fourth level. Control accounts use to track the cost. You can measure the financial performance of your project with the help of earned value calculation.
It is the process that includes the cost estimation of all the tasks or activities for the completion of the project according to the scope and within the given timeline and set budget. In the initial stages, high-level estimation creates and once the project gets approval, a details estimation creates on every aspect of the project.
Cost baseline is actually an approved form of the budget of the project. Once it gets to approve the manager takes it as a baseline and makes it a point used for comparing the progress of the project. Cost baseline is usually breaking down into two sections, cost category and cost period of time.
Cost Control and Reporting
A project manager is responsible for project control and controls it in an effective way. The following techniques are very effective in the cost control process
- Budget planning
- Management of time
- Tracking of cost
- Earned value measurement
Change Control Process
This defines any kind of change and unexpected expenditures that arise during the project life cycle. The cost management team has kept in mind the 10% variation in the cost of any project and there are strategies to manage them when the need arises.
The project budget provides an accurate estimation of the project cost. The project budget always finds the feasibility for the project.