Project Management

Does Your Cost Management Plan Have These 7 Features?

A cost management plan must be practical and straightforward for stakeholders to understand. Add too many details, and they will doze off, too less, and they might turn skeptical. In this article at PMTips.net, Lucy Hatcher discusses seven features that you must include in the cost management plan.

Planning the Finances Right

Projects depend on the capability of project managers to be articulate and proactive. Below are the seven key features to have in your cost management plan:

Define the Units of Measurement: State the units of measurement in the cost management plan. Base it on the location and the type of project you are handling. Sometimes, clients want different project-specific measurements.

Define the Techniques and Rules of Measurement: Earned value management (EVM) is the recommended technique to measure cost efficiency. Percent completion estimates your activities in three stages—initiation, ongoing, and closure. Add other preferred methods, too, if you have any.

Define the Limits: This feature in the cost management plan will stop the project costs from going overboard. Set the limits in terms of budget, safety measures, and thresholds.

Define the Diligence Levels: If it is a material, define the acceptable extent of deviation from the actual length. For numbers, determine how far you would go in terms of decimals—tenth, hundredth, or thousandth. Include in the cost management plan if the project should have a fixed or flexible deadline. Make a note of the compromises that stakeholders are ready for transparency.

Define the Range of Accuracy: It deals with the percentage and acceptable range of activities. If the cost estimate for an event is $1,000, the fair percentage of the amount deviation can be 10%. Beyond that, stakeholders get an alert to stop or revise the activity.

Define the Reporting Structure: Decide the template you will use to send cost reports to the stakeholders involved in the cost management plan. Define what elements you will include—generic or customized—and the preferred reporting frequency.

Keep a Miscellaneous Section: Incorporate here the project aspects that will not fit anywhere but are a necessary part of the cost management plan. Depict how you want to receive funds—in cash, cheque, or through digital transactions. Decide how you will record the cash transactions—in an excel or a notebook. Mention the corporate tools or applications you will use to manage project costs. If you require more funding, add the contact person details and the mode of payment.

To view the original article in full, visit the following link: https://pmtips.net/article/7-key-elements-to-include-in-your-cost-management-plan

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