Process: Plan Cost Management
Process Group: Planning
Knowledge Area: Project Cost Management
Purpose
The Plan Cost Management process defines how project costs will be estimated, budgeted, managed, monitored, and controlled. It results in the Cost Management Plan, which provides the framework and guidelines for all financial decisions throughout the project lifecycle.
Inputs
- Project Charter – Includes summary budget, financial boundaries, and stakeholder expectations.
- Project Management Plan – Especially the schedule and risk management plans, which impact cost decisions.
- Enterprise Environmental Factors (EEFs) – Market conditions, currency exchange rates, and organizational financial policies.
- Organizational Process Assets (OPAs) – Cost estimating templates, historical data, and budgeting procedures.
Tools and Techniques
- Expert Judgment – From financial analysts, cost engineers, or experienced project managers.
- Data Analysis – Includes alternatives analysis to assess different cost control and funding approaches.
- Meetings – Planning sessions to align the team on the cost management methodology and responsibilities.
Outputs
- Cost Management Plan – A component of the project management plan that describes:
- Units of measure (e.g., USD, hours)
- Level of accuracy and precision
- Rules for rounding and reporting
- Control thresholds and variance response actions
- Earned value management rules
- Links between cost, schedule, and scope baselines
- Funding requirements and approval processes
Role in the Process Group and Knowledge Area
- As part of the Planning Process Group, this process sets the foundation for all downstream cost activities.
- Within Project Cost Management, it enables consistency, traceability, and governance in handling project finances.
Why It Matters
- Ensures Financial Discipline – Sets the rules for how project funds are used and tracked.
- Supports Accurate Estimation – Establishes consistent methods for cost planning and forecasting.
- Enables Cost Control – Provides the baseline and procedures to measure performance and manage deviations.
- Aligns with Organizational Standards – Ensures the project conforms to financial policies and stakeholder expectations.