The Project manager creates the project management plan basis inputs from the project team and the key stakeholders.
A Project management plan is a formal, approved document that defines how the project will be executed, monitored, and controlled. [IPECC]
The Project Management Plan or Project Plan as referred to comprise of Baselines and subsidiary plans supported by supporting and planning documents acting as reference points.
The objective of preparing Project Plan is to define the approach the project team takes to deliver the intended project management scope of the project, which in turn enables to achieve goals and objectives.
- Baselines for scope, schedule, and cost
- Management plans for scope, schedule, cost, quality, human resources, communications, risk, and procurement
- Requirement management plan
- Change management plan
- Configuration management plan
- Process improvement plan
What is Cost Management PlanA cost management plan is a method of strategizing the planning and execution of a project’s budget. This is done or prepared in order to complete your project on time and on budget. In absence of proper cost management plan in place, both of those things will falter—costing you as PM and your organization immensely.
Four important inputs to cost management plan
- Resource Planning – Work Break Down Structure (WBS) acting as key input
- Cost Estimation
- Budgeting – Budgets are formed and approved after the estimation phase, and are typically released for the project in a series of phases depending on the project’s progress. [In terms of PRINCE2 – Management Stage] This will help the project reach its milestones within each budgetary phase, rather than trying to match an overall project budget
- Cost Control – Cost control is simple—you’ll measure your project’s dollar value performance against your total cost and timeline. This will help provide a benchmark throughout the project process
Some Important Terms used while preparing Cost Management Plan
- Cost Baseline
- Control Threshold
- Earned Value Measurement / EVM
- Estimation Techniques – Bottom-Up, Analogus & Parametric
Key to Successful Cost Management Plan
- Effective Stakeholders Management and Communication
- Effective use of WBS – Not mapping every step necessary to reach your project’s final deliverable is going to impact your budget, and in so doing, your cost management plan
- Must use Cost Management/Budgeting tool for planning and tracking
As seen above, Cost Management Plan will help PM to both plan for the project cost, and manage your project cost throughout the course of the project’s life cycle. [IPECC]
As PM project is underway, project expenses will be thoroughly documented throughout the project so that your project can stay within budget.