34 Items in a Cost Management Plan

Cost escalation

Keeping project costs under control can feel like swimming against the current sometimes.

To prevent you from going up the creek without a paddle, a Cost Management Plan is the guiding document which allows you to take fast, decisive action when issues arise and the sharks are circling.

The Project Cost Management Plan is the component of the overall Project Management Plan which deals with project costs.  It provides details of how the project costs will be estimated, tracked, and controlled.

The project manager’s ability to influence project costs starts high and decreases as the project goes on.  Hence the planning stage is the right time to consider how project issues will be dealt with.

  1. Labor rates
  2. Material costs
  3. Tools and Equipment costs
  4. Subcontractor budgets
  5. Services that must be procured
  6. Strategies for contingencies
  7. Strategies to prevent unnecessary cost escalation
  8. Whether equipment will be financed:  Purchased, Leased, or Rented
  9. Insurance requirements
  10. Bonding
  11. Financing and interest requirements
  12. The person responsible for estimating
  13. The person responsible for reviewing and/or approving estimates
  14. Milestones at which the estimates will be revisited and re-approved
  15. Source of the estimates. For example, published commercial information
  16. The person who will approve the final project cost
  17. The processes and procedures that will be used to produce the estimates
  18. Any special circumstances under which the estimates be revised
  19. Processes and procedures to revise estimates
  20. Communication with funding sources
  21. Amount of contingency to include in each task
  22. Quantity of Management Reserve
  23. Project methodology, assumptions, and/or background information
  24. How the project costs will be measured
  25. Who will measure the costs
  26. How often they will be measured and/or input into software
  27. Person who will approve changes to project costs
  28. How purchases will be made
  29. Measurement of project performance
  30. Production of performance reportsboat without paddle
  31. Communication of performance reports
  32. Which Earned Value variables will be reported
  33. Who the earned value analysis will be reported to
  34. Typical corrective actions based on earned value variables

Use this checklist to make sure you have a good handle on project costs, and don’t get stuck up the creek without a paddle too.

About Bernie Roseke, P.Eng., PMP

Bernie Roseke, P.Eng., PMP, is the president of Roseke Engineering. As a bridge engineer and project manager, he manages projects ranging from small, local bridges to multi-million dollar projects. He is also the technical brains behind ProjectEngineer, the online project management system for engineers. He is a licensed professional engineer, certified project manager, and six sigma black belt. He lives in Lethbridge, Alberta, Canada, with his wife and two kids.

View all posts by Bernie Roseke, P.Eng., PMP

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