What is project 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 7^th 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 7^th 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)

APM ACostE Estimating Guide 

Everything you need to know about estimating in one essential guide. Estimates are critical to project professionals; vital when making informed decisions about projects across the different stages of the entire project life cycle to ensure successful project delivery.

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

Planning, scheduling, monitoring and control

Planning, Scheduling, Monitoring and Control offers practical guidance on all planning aspects of preparing to undertake a project, executing a project, controlling its delivery to budget, time and quality, and delivering it safely.

Related reading

Measuring time and budgets – what the project management community can learn from the construction industry

I hail from the construction industry which has a poor public image. Whilst it may have a poor reputation it has established techniques and processes that provide highly effective controls which other sectors could benefit from... read more.

APM Planning, Monitoring and Control Specific Interest Group

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. 

APM Body of Knowledge 7^th edition

The APM Body of Knowledge 7^th 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.