Identify ways to reduce costs by comparing estimated costs with actual costs and evaluating variances for possible corrective actions.Monitor and control spending during a project's lifecycle.The cost estimates are used as a baseline for controlling budgeted costs and are compared against actual costs throughout each phase of the project.Ĭost management is crucial because it helps you: Why do we need it? When you have this information, you can use it to track costs throughout the project. When you start a new project you will have to consider all the resources needed for you to run a successful project and avoid budget overruns. Project cost management is an important component of project management. Why is project cost management important? This means that you, as the project manager, need to understand the cost of each activity within your project, and how much time it will take to complete each activity. It is especially relevant when dealing with fixed-price projects. Cost estimation is an ongoing process that continues as the project moves from definition to completion. It is performed by the project manager, usually along with the core team. It is one of the most important aspects of project management and a primary function of any project manager.Ĭost estimation is the process of predicting the cost of resources to complete a project. Successful project cost management begins with good estimation practices. As a project manager, it is essential that you calculate project costs during the planning phase for approval before work commences to stay within the cost management plan. Project cost management aims to avoid any cost overruns on projects, ensure project profitability, and keep profit margins high. By the PMI's definition, project cost management is the process of planning, estimating, budgeting, financing, managing, and controlling costs to complete the project within the approved budget.
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