{"id":18823,"date":"2021-04-26T00:00:00","date_gmt":"2021-04-26T05:00:00","guid":{"rendered":"https:\/\/blog.planview.com\/cost-management-plan\/"},"modified":"2021-04-26T00:00:00","modified_gmt":"2021-04-26T05:00:00","slug":"cost-management-plan","status":"publish","type":"post","link":"https:\/\/blog.planview.com\/cost-management-plan\/","title":{"rendered":"What is a Cost Management Plan?"},"content":{"rendered":"<p> <!-- .post-meta --><\/p>\n<div class=\"et_pb_section et_pb_section_0 et_section_regular\">\n<div class=\" et_pb_row et_pb_row_0\">\n<div class=\"et_pb_column et_pb_column_4_4  et_pb_column_0 et_pb_css_mix_blend_mode_passthrough et-last-child\">\n<div class=\"et_pb_text et_pb_module et_pb_bg_layout_light et_pb_text_align_left  et_pb_text_0\">\n<div class=\"et_pb_text_inner\">\n<p><span style=\"font-weight: 400\">In simple words, a <strong>cost management plan<\/strong> is the outline of the project&#x2019;s estimation, allocation and control of costs for the required resources to complete all project activities. The project&#x2019;s cost plan configuration is one of the most essential parts of a project&#x2019;s <\/span><a href=\"\/project-management-planning-phase-best-practices\"><span style=\"font-weight: 400\">planning phase,<\/span><\/a><span style=\"font-weight: 400\"> and effectively serves as a safety net that guarantees that project cost is kept within the limits of the budget. The <strong>cost management plan<\/strong> in general terms analyzes how the project costs will be planned, funded and controlled.<\/span><\/p>\n<p><img class=\"lazyload\" title=\"cost management plan\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2018\/02\/cost-management.jpg\" alt=\"cost management plan\" height=\"350\"><\/p>\n<p><span style=\"font-weight: 400\">A <strong>cost management plan<\/strong> usually <\/span><a href=\"http:\/\/www.clarizen.com\/product\"><span style=\"font-weight: 400\">involves several decisive procedures<\/span><\/a><span style=\"font-weight: 400\"> ensuring that the project will be executed within the approved budget and quality standards.<\/span><\/p>\n<p><b>What does a Cost Management Plan include?<\/b><b><\/b><\/p>\n<ul>\n<li><b>Levels of precision: <span style=\"font-weight: 400\">Define how close the measured values are to each other, such as the rounding up of decimal places in calculated totals, which might become the cause of significant deviations in cost estimation. Despite the size of the project and the fact that a considerable amount of resources can be used during a project, it is very important to set a level of precision from the very beginning and make sure all stakeholders are informed and respect the agreed upon levels, in order to avoid any differences in cost that may occur. <\/span><\/b><\/li>\n<\/ul>\n<p>&#xA0;<\/p>\n<ul>\n<li style=\"font-weight: 400\"><b>Units of measurement: <\/b><span style=\"font-weight: 400\">Define the dimensions, quantity, capacity, amount, etc. Since the variation in size can cause significant increases in material and production costs, definitions of units of measurement are a crucial feature that need to be defined, especially when project resources or procedures take place in different countries. Establishing a common point of reference can facilitate communication and avoid complications in understanding before they appear. <\/span><\/li>\n<\/ul>\n<p>&#xA0;<\/p>\n<ul>\n<li style=\"font-weight: 400\"><b>Control thresholds:<\/b><span style=\"font-weight: 400\"> Are the regulation of the minimum and maximum cost variation standards. Depending on the size of the project and its approved budget, it is most significant for foreseeing a particular area of a budget, in case it might be needed to be pulled back on track or in the event of a project going off schedule or a resource turning out to cost more than initially estimated. <\/span><\/li>\n<\/ul>\n<p>&#xA0;<\/p>\n<ul>\n<li style=\"font-weight: 400\"><b>Rules of performance measurement:<\/b><span style=\"font-weight: 400\"> Since all projects are expected to have specific objectives and as productivity is not always equal to performance, this is <\/span><a href=\"\/essential-metrics-of-project-performance\"><span style=\"font-weight: 400\">a method for measuring the level of completion of activities<\/span><\/a><span style=\"font-weight: 400\"> and its earned value must be arranged upfront. In terms of how the progress of each activity is to be considered, it is necessary to define these from the planning phase, as salaries and human resources usually constitute the largest portion of a project&#x2019;s budget. <\/span><\/li>\n<\/ul>\n<p>&#xA0;<\/p>\n<ul>\n<li style=\"font-weight: 400\"><b>Reporting formats:<\/b><span style=\"font-weight: 400\"> Establishing reporting protocols, their format and frequency through all stages of a project is of primary importance, especially when one considers that a project usually has more than two reporting periods, as well as the fact that reporting can be extremely useful in detecting deviations from the original plan. <\/span><\/li>\n<\/ul>\n<p>&#xA0;<\/p>\n<p><span style=\"font-weight: 400\">As a project manager in today&#x2019;s challenging business landscape it is quite certain that you will come across the question &#x201C;What is a cost management plan?&#x201D; several times in your career. On these occasions, you need to be well prepared to respond accurately and specifically to the query. Furthermore, you will need to comprehend the importance of <\/span><a href=\"\/manage-cost-project-management\"><span style=\"font-weight: 400\">management cost configuration<\/span><\/a><span style=\"font-weight: 400\"> in order to bring the project to a successful completion, even though predicting the coming cost of project activities may not be your strong suit<\/span><\/p>\n<div id=\"content-cta\">\n<div id=\"content-cta-text\">Increase your business agility with Planview AdaptiveWork&#x2019;s project management software<\/div>\n<div id=\"content-cta-button\"><a href=\"https:\/\/www.clarizen.com\/resource\/product-tour\/?refer=blogpost\">Take a Product Tour<\/a><\/div>\n<\/div>\n<p><span style=\"font-weight: 400\">As you will be in charge of managing and reporting on the project&#x2019;s cost throughout <\/span><a href=\"\/project-management-life-cycle\"><span style=\"font-weight: 400\">its entire lifecycle,<\/span><\/a><span style=\"font-weight: 400\"> the earlier you develop an approximation of cost and the more farsighted you can be, the better the chances are of successful project delivery. These few words of advice from Denis Waitley could come in very useful when performing cost management planning: &#x201C;Expect the best, plan for the worst and prepare to be surprised.&#x201D;<\/span><\/p>\n<\/div>\n<\/div>\n<p> <!-- .et_pb_text --><\/p>\n<div class=\"et_pb_code et_pb_module  et_pb_code_0\">\n<div class=\"et_pb_code_inner\">  <\/div>\n<p> <!-- .et_pb_code_inner --><\/div>\n<p> <!-- .et_pb_code --><\/div>\n<p> <!-- .et_pb_column --><\/div>\n<p> <!-- .et_pb_row --><\/div>\n<p> <!-- .et_pb_section --><\/p>\n<div class=\"et_pb_section et_pb_section_1 et_section_regular\">\n<div class=\" et_pb_row et_pb_row_1\">\n<div class=\"et_pb_column et_pb_column_4_4  et_pb_column_1 et_pb_css_mix_blend_mode_passthrough et-last-child\">\n<div class=\"et_pb_code et_pb_module  et_pb_code_1\">\n<div class=\"et_pb_code_inner\"><a href=\"https:\/\/www.clarizen.com\/lp\/g2-portfolio-and-project-management-software\/\"><\/p>\n<div id=\"content-g2\">\n<div class=\"first-width\">\n<div id=\"content-g2-text\">Planview AdaptiveWork has been named a Leader&#xA0;in G2&#x2019;s Winter 2021 Grid report of Project &amp; Portfolio Management Software vendors, the ranking is based on receiving high customer satisfaction scores from customers.<\/div>\n<\/div>\n<div class=\"second-width\">\n<div id=\"content-g2-award\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2021\/02\/g2-leader-rating.png\" height=\"150px\"><\/div>\n<\/div>\n<div class=\"third-width\">\n<div id=\"content-g2-rating\">\n<div class=\"elfsight-app-4dddabda-f792-4293-a033-11066bf074b3\" style=\"height: 130px;width: 250px;overflow: hidden\"><\/div>\n<p> <a title=\"Read reviews of Planview AdaptiveWork One on G2\" href=\"https:\/\/www.g2.com\/products\/clarizen-one\/reviews?utm_source=review-widget\" target=\"_blank\" rel=\"noopener\"><img class=\"lazyload\" data-src=\"https:\/\/www.g2.com\/products\/clarizen-one\/widgets\/stars?color=blue&amp;type=read\" alt=\"Read Planview AdaptiveWork One reviews on G2\"><\/a><\/div>\n<\/div>\n<\/div>\n<p><\/a><\/div>\n<p> <!-- .et_pb_code_inner --><\/div>\n<p> <!-- .et_pb_code --><\/div>\n<p> <!-- .et_pb_column --><\/div>\n<p> <!-- .et_pb_row --><\/div>\n<p> <!-- .et_pb_section --><\/p>\n<div class=\"client-logo\"> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Siemens Energy\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/08\/siemens_energy-200x100.png\" alt=\"Siemens Energy\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"IIROC Success\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/07\/IIROC_logo-200x100.gif\" alt=\"IIROC Success\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Financial Services Institution\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/04\/FINANCIAL-SERVICES-IMG-200x100.jpg\" alt=\"Financial Services Institution\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"M Squared\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2020\/03\/m-squared-logo-200x100.jpg\" alt=\"M Squared\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Aliancys Success\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2019\/12\/aoc_aliancys-logo-800x400-200x100.jpg\" alt=\"Aliancys Success\"><\/a> <a href=\"https:\/\/www.clarizen.com\/customers\/\" title=\"Bonfiglioli Success\"><img class=\"lazyload\" data-src=\"https:\/\/media.planview.com\/clarizen\/wp-content\/upload\/2019\/11\/bonfiglioli_logo-800x400-200x100.jpg\" alt=\"Bonfiglioli Success\"><\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In simple words, a cost management plan is the outline of the project&#x2019;s estimation, allocation and control of costs for the required resources to complete all project activities. The project&#x2019;s cost plan configuration is one of the most essential parts of a project&#x2019;s planning phase, and effectively serves as a safety net that guarantees that&#8230;<\/p>\n","protected":false},"author":205,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","footnotes":""},"categories":[35],"tags":[],"class_list":["post-18823","post","type-post","status-publish","format-standard","hentry","category-pmo-project-management-organizations"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.8 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What is a Cost Management Plan?<\/title>\n<meta name=\"description\" content=\"A cost management plan is the 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