Cost Planning and Cost Control

In this episode, I explain the concepts of Cost Planning and Cost Control, highlighting the difference between the two and how they are applied by the project manager to achieve the goal of the project.

Cost planning is the process of estimating the cost of a project before it starts, based on the estimated costs of its smaller components. Cost control is the process of monitoring and controlling the cost of a project and its progress by comparing the actual costs with estimates and making adjustments when necessary. PRINCE2 methodology offers at least a 10% buffer which is a contingency project for unforeseen cost changes. Also, considering the MoSCoW method (Must have, Should have, Could have, and Won't have); pivotal considerations must be made before any adjustments to a project. 

A good project manager must be aware of the cost planning for the project. This starts with a detailed assessment of the project scope as it is crucial to stick to the scope to avoid "scope creep" The goal of cost planning is to provide an accurate estimate which may not be the exact price but can be used to develop a budget. A well-executed cost plan helps to identify cost savings and areas where additional funding may be required. 

Cost control is an ongoing process that begins once a project is underway; it involves regular monitoring of the actual cost against the estimated cost. There are fixed costs which usually stay the same and variable costs which fluctuate more. Identifying these costs helps the project manager anticipate likely changes and make adjustments to keep the project on track.

Cost control requires ongoing cooperation between the project manager and the client. The project manager must make recommendations as needed. The team should also be aware of the budget and keep its costs in line with the budget. 

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