7 Outputs Of Plan Cost Management Plan
In my previous article, I have talked about some of the tools and techniques that are needed when planning a cost management plan document for projects. I now want to look at some of the outputs of the plan cost management plan for projects. Follow me as we look at that together in this article.
Now the outputs…
The cost management plan is a component of the project management plan and describes how the project cost will be planned, structured and controlled. The cost management process and there associated tools and techniques are documented in the cost management plan.
The cost management plan can establish the following:
#1 Unit of measure
Each unit used in measurement such as staff hours, or weeks for time measures; meters, litres tons, kilometres, or cubic yards for quality measures; or lump sum in currency form is defined for each of the resources.
#2 Level of precision
This is the degree for which cost estimates will be rounded up or down based on the scope of the activities and magnitude of the project.
#3 Level of accuracy
This is the acceptable name i.e plus or minus 10% used in determining realistic cost estimates is specified and may include a number of contingencies.
#4 Organisational procedure links
The work breakdown structure provides the framework for the cost management plan, allowing for consistency with the estimates, budgets and control of costs. The WBS component used for the project cost accounting is called the control account. Each control account is assigned a unique code of account number(s) that links directly to the performing organisation’s accounting system.
#5 Control thresholds
Variance thresholds for monitoring cost performance may be specified to indicate an agreed-upon amount of variation to be allowed before some action needs to be taken. Thresholds are typically expressed as percentage deviations from the baseline plan.
#6 Rule pf performance measurement
Earned Value Management rules of performance measurement are set. For example, the cost management plan may define the points in the WBS at which measurement of control accounts would be performed. Establish the EVM techniques i.e weighted milestone, fixed formula, percentage complete among others to be employed. It also includes special tracking methodologies and the EVM computation equations for calculating projected Estimate At Completion forecast to provide a validity check on the bottom-up EAC.
#7 Reporting formats
This highlights the format and frequency for the various cost reports are refined.
#8 Additional details
Additional details about cost management activities include the Description of strategic funding choices. It also includes the procedure for an account for fluctuations in currency exchange rates and procedures for project cost recording among others.
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