1. 1- COST MANAGEMENT PLAN  

The cost management plan is a component of the project management plan and describes how the project costs will be planned, structured, and controlled.

The cost management processes and their associated tools and techniques are documented in the cost management plan.

For example, the cost management plan can establish the following:  

  • * Units of measure.

  •  Each unit used in measurements (such as staff hours, staff days, or weeks for time measures; meters,

  • liters, tons, kilometers, or cubic yards for quantity measures; or lump sum in currency form) is defined for each of the resources.  

  • * Level of precision.

  •  This is the degree to which cost estimates will be rounded up or down, based on the scope of the activities and magnitude of the project.  

  • * Level of accuracy.

  •  The acceptable range (e.g., ±10%) used in determining realistic cost estimates is specified, and may include an amount for contingencies.  

  • * Organizational procedures links. 

  • The work breakdown structure (WBS) provides the framework for the cost management plan,

  • allowing for consistency with the estimates, budgets, and control of costs.  

  • * Control thresholds.

  •  Variance thresholds for monitoring cost performance may be specified to indicate

  • an agreed-upon amount of variation to be allowed before some action needs to be taken.  

  • * Rules of performance measurement.

  •  Earned value management (EVM) rules of performance measurement are set.

  • For example, the cost management plan may:  

  • * Define the points in the WBS at which measurement of control accounts will be performed;  

  • * Establish the EVM techniques (e.g., weighted milestones, fixed-formula, percent complete, etc.) to be employed; and  

  • * Specify tracking methodologies and the EVM computation equations for calculating projected estimate

  • at completion (EAC) forecasts to provide a validity check on the bottom-up EAC.  

  • * Reporting formats.

  •  The formats and frequency for the various cost reports are defined.  

  • * Additional details.

  •  Additional details about cost management activities include but are not limited to:  

  • * Description of strategic funding choices,  

  • * Procedure to account for fluctuations in currency exchange rates, and  

  • * Procedure for project cost recording.