A cost management plan is a document that explains how an organisation will handle its costs over the course of a project or business process. A cost management plan’s goal is to set clear rules and procedures for handling and keeping track of costs, so that the project or business process stays within budget.
Here are some important parts that a normal plan for cost control should have:
Cost base line: This is the price for the project or business process that has been accepted. It shows how much the whole project or process will cost and should be used as a standard to compare the real costs to.
Cost Control Measures: These are the steps that will be done to keep prices within the budget. Some examples are finding and stopping “scope creep,” keeping an eye on costs on a regular basis, and making sure that all changes to the project or process are accepted before they are put into place.
Cost Estimation Techniques: This part should talk about the ways costs are estimated, like bottom-up, top-down, or similar.
Roles and Duties: This part explains who is in charge of handling costs, like the project manager or the finance team.
Plans for what will happen if costs go over budget are called “contingency plans.” This could mean getting more money or narrowing the focus.
Reporting and Monitoring: This part explains how costs will be tracked, reported, and watched throughout the project or business process.
Risk Management: This part explains how problems that could affect costs will be found, evaluated, and dealt with.
Overall, a cost management plan is an important record for any project or business process that includes spending money. It helps make sure that costs are handled well and the project or process is finished on time and on budget.
