4 Functions of Cost Management
Cost management is a continuous, fluid process.
However, there are four main elements or functions that can be found in any cost management plan:.
1) Resource planning.
2) Cost estimating.
3) Cost budgeting.
4) Cost control Because new expenses can appear and project scope can be adjusted, cost managers need to be prepared to perform all four functions.
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Cost Management, Defined
Cost management is the process of estimating, budgeting, and controlling project costs.
The cost management process begins during the planning phaseand continues throughout the duration of the project as managers continuously review, monitor, and adjust expenditures to ensure the project doesn't go over the approved budget.
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How do I manage project costs?
In order to best manage project costs, you have to know your project inside and out.
The best way to do that is at the start of the project by creating a thorough project charter.
ProjectManager is online software with the tools you need for cost management planning across all phases of your project.
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Post-Project Cost Accounting
Once the project is over, it’s time to calculate cost varianceand evaluate how far your project deviated from your original budget and estimates.
What were the project’s total costs.
How did your actual costs compare to your estimated costs.
A successful project ends close to (but under) the forecasted project budget.
If you spent too much money, y.
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What are some key terms & stages relevant to cost management?
Here are some key terms and stages relevant to cost management:
Planning: Using the work breakdown structure to determine the resources needed to complete a job or project.
Estimating:The act of calculating or predicting the expected total cost of completing a project. ,
What are the 4 steps to cost management?
The following are the four main steps to cost management. 1.
Setup The setup phase determines what's included in the cost management plan.
It identifies who the stakeholders in the plan are, the tools used to manage costs and the data structure needed to track costs. 2.
Resource planning .
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What is cost management?
Cost Management is a function which includes ,the processes that are required to maintain effective financial control of projects (evaluating, estimating, budgeting, monitoring, analyzing, forecasting and reporting the cost information).
Cost is the cash value of project activity. 1.
Design-to-Cost (DTC), as part of cost management techniques, describes a systematic approach to controlling the costs of product development and manufacturing.
The basic idea is that costs are designed into the product, even from the earliest concept decisions on and are difficult to remove later.
These costs are seen as an equally important parameter besides feature scope and schedule, the three taken together yielding the well-known project triangle.
