What is cost planning and control?



Definition

Cost planning and control is the estimation of costs, the setting of an agreed budget, and management of actual and forecast costs against that budget.

Definition from APM Body of Knowledge 7th edition  📖

Cost planning


Cost planning is an essential part of the project management process. Project managers need to understand where costs fall in their schedule to manage demand for resources.

Typically, all resources that consume costs will be included in a resource optimised schedule. This type of schedule is essential to cost planning, to help build up picture of planned costs over time.

Planned costs can be fixed or variable. A fixed cost happens once in the life of a project, for example, a machine setup. A variable cost happens more than once over the life of a project, for example, component machining.

Abridged from APM Body of Knowledge 7th edition  📖

Cost control


Cost control is the process of collecting actual costs and collating them in a format to allow comparison with project budgets. Cost control is necessary to keep a record of monetary expenditure for purposes such as:

  • minimising cost where possible;
  • revealing areas of cost overspend.

Cost control information is fundamental to the lessons learned process, as it can provide a database of actual costs against activities and work packages that be used to inform future projects.

APM’s Planning, Scheduling, Monitoring and Control (2015)


Cost breakdown structure


Cost budgets usually start with a procurement strategy and the cost breakdown structure (CBS). The CBS defines the level at which costs will be collected. Its purpose is to allow budgets to be set and costs to be collected, recorded and controlled.

APM’s Planning, Scheduling, Monitoring and Control (2015)

Diagram: Cost breakdown structure (CBS). Copyright APM


APM Body of Knowledge 7th edition


You can learn more about cost planning and control in chapter four of the APM Body of Knowledge 7th edition.

The APM Body of Knowledge 7th edition is a foundational resource providing the concepts, functions and activities that make up professional project management. It reflects the developing profession, recognising project-based working at all levels, and across all sectors for influencers, decision makers, project professionals and their teams.

The seventh edition continues in the spirit of previous editions, collaborating with the project community to create a foundation for the successful delivery of projects, programmes and portfolios.

APM Body of Knowledge

 





APM – ACostE Estimating Guide


APM – ACostE Estimating Guide

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Planning, Scheduling, Monitoring and Control


Planning, Scheduling, Monitoring and Control

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APM Planning, Monitoring and Control (SIG)


The generic area of operation is project control, focusing on the techniques and processes listed as well as interfaces to other subject areas, e.g. risk, governance, programme and portfolio management.

View SIG


Blog


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