HKSM
Cost Management Plan
A section of the overall project or program management plan that explains how project costs will be estimated, organized into budgets, governed, and monitored for control.
Key Points
- Defines methods and tools for cost estimating (e.g., analogous, parametric, bottom-up), including units of measure and precision.
- Describes how the budget and cost baseline will be developed, updated, and how funding will be released.
- Sets cost control rules: thresholds, variance analysis, EVM metrics (e.g., CPI), reporting formats, and frequency.
- Clarifies roles, approvals, and how cost changes integrate with the overall change control process.
Example
On a construction project, the cost management plan states that estimates will be built bottom-up at the work package level, rounded to the nearest $100. The plan sets a 10% variance threshold at the project level and requires monthly EVM reports. Any forecast overrun beyond the threshold triggers a change request to adjust scope, schedule, or budget.
PMP Example Question
Which document explains how project costs will be estimated, budgeted, monitored, and controlled, including variance thresholds and reporting formats?
- Cost Management Plan
- Cost Baseline
- Project Charter
- Project Funding Requirements
Correct Answer: A — Cost Management Plan
Explanation: The cost management plan defines the processes, tools, metrics, and controls for managing project costs; the cost baseline is a result of planning, not the plan for how to manage it.
