Project cost planning

Project cost management is critical to the control of the project

For senior management, the total cost of activities at project completion is usually the element that defines the success or failure of a project, often regardless of any represented value for money.

Cost management includes the processes and tools required to maintain financial control of the project.

Elements in cost management are:

1. Cost Estimation and Forecasting
2. Cost Budgeting
3. Cost Control.

At the overall project level, project costs are estimated by looking at human resource and non-human resource components and tangible items to ensure total approximate costs can be met within the initiating project budget. To develop the detailed project budget, the costs are estimated at the activity or task level, decomposed from the work breakdown structure (WBS) and identified in the project’s schedule.

Project Advantage offer extensive training in cost management as a part of our Project Advantage Accelerator Program.

The fundamental principles guiding cost management are:

• Project cost management is an iterative process just like all of project planning.
• Project cost management depends on organisational policies and on the schedule development process.
• As well as cost totals, the team needs to know when these costs will be incurred for both cash flow management and project control reasons.
• All costs, including taxes and general administration, need to be accounted for.
• A contingency cost for risks should be included.
• The goal of the project budgeting process is to establish a cost baseline
• The budget should adderss the total project lifecycle, not just executing phases
• Budget assumptions need to be documented like all other project assumptions.

For all project management fundamentals training contact the team here at Project Advantage and Join the Project Advantage Accelerator Program Here