Plan Cost Management is the process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled. The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project.

Cost management ensures project completion within budget. This involves tracking all resource costs (people, equipment, materials, facilities) through estimating, budgeting, and control processes. The Cost Management Plan outlines these activities, including cost estimation methods, budget development, and baseline establishment alongside control measures.

• Estimate Costs – Estimation of the monetary resources needed to complete the project work
  • Cost estimation predicts project resource costs based on current information that is available at a particular point in time. It considers cost alternatives like develop vs. buy, and estimates all chargeable resources (labor, materials, etc.) to optimize project spending.
• Determine Budget – Aggregation of costs and activities to determine a cost baseline
  • Budget determination involves the process of aggregating the estimated costs of individual activities or work packages to establish a baseline for the project budget. A project budget includes all the funds authorized to execute the project. the cost baseline is the approved version of the time-phased project budget that includes contingency reserves, but excludes management reserves.
• Control Costs – Monitoring project status to update budget and manage changes to the cost baseline
  • Any increase to the authorized budget can only be approved through the Perform Integrated Change Control process.