Summary

Cost management is important in all projects, even if it has been said that 'Cost is no object'. Cost estimating is about estimating the costs of the various activities in the project. Ensure that you know what level of accuracy is required. It is normal in many organizations to start with a rough order of magnitude estimate and then refine down to a more accurate estimate. There are eight different tools or techniques for estimating, the easiest being the conference method, and the most complex parametric estimating. Complex does not necessarily mean better or more accurate, so choose the right technique.

Cost budgeting takes the estimate and works out what it means in terms of a costed and dated plan, so that work packages are costed and cost codes assigned to the project and its elements. It also links the project's accounting into the organization's management accounting system.

Cost estimating and budgeting are part of the planning process group. The third cost management process, cost control, is part of the monitoring and controlling process group, and also part of integrated change control. Cost control is about ensuring that the project's costs stay within the agreed budget for the project.

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