Cost management is the process of estimating, allocating, and controlling Project cost This cost management process allows a business to predict coming expenses in order to reduce the chances of budget overrun. Projected costs are calculated during the planning phase of project and must be approved before work begins.
As the project plan is executed, expenses are documented and tracked so things stay within the cost management plan. Once the project is completed, predicted costs vs. actual costs are compared, providing benchmarks for future cost management plans and project budgets.
Cost project management is vital to an organization’s project planning process. In fact, global services company Accenture believes sustainable cost management should be “part of the company’s DNA.”
Without a detailed budget, you cannot effectively map out the resources needed for your project. For example, if you are renovating an office building, you need to hire an architect, pay for building materials, and agree upon hourly rates for construction workers. For all these tasks, you need to accurately estimate all costs and ensure you have the budget to cover these resource costs.