Plan Cost Management

This article contains most of the important information you need to know about Plan Cost management process in order to answer questions related to this topic in the PMP Exam, I recommend you review this type of articles 1 week before your exam date, all information mentioned are based on PMBOK Guide 6th edition and PMP Exam Prep 9th edition for Rita Maclhy’s, ITTO refers to Inputs, Tools & Techniques and outputs.

This process is a part of Planning Process group and Cost Management Knowledge Area with the following ITTO’s


  1. Project Management Plan ( Schedule and Risk Management plans )
  2. Project Charter
  3. Organizational Process Assets
  4. Enterprise Environmental Factors

Tools & Techniques:

  1. Expert Judgment
  2. Meetings
  3. Data Analysis


  1. Cost Management Plan


  • This process defines how you are going to plan, manage and control costs.
  • It defines how the project costs will be estimated, budgeted, managed, monitored and controlled.
  • Cost management planning efforts occurs early in project planning and sets the framework for each of the cost management processes.
  • Funding a project can be through Self Fund, Funding with equity or funding with debits.
  • Cost management plan is the only output of this process; it can be called budget plan or budget management plan. It is about thinking in advance about how you will manage costs , it may include
  1. Units of measure
  2. Funding decisions.
  3. Level of accuracy.
  4. Level of precision
  5. Cost change control procedures
  6. Cost thresholds
  7. Methods of documenting costs.
  8. Rules of performance measurement .
  9. Roles and responsibilities of cost activities.
  10. Organizational procedure links.
  • Cost thresholds: the amount of variation allowed before you need to take action.
  • Discounted Cash flow: A technique to estimate the attractiveness of an investment by predicting how much money will be received in the future.
  • Life Cycle Costing : Looking at costs over the entire life of the product, not just the cost of the project to create the product.
  • Value analysis: referred as value engineering , its focus is to find a less costly way to do the same work while maintaining the same scope.
  • Cost Risk , It involves the cost related risk .

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