There are numerous details and variable costs that must be calculated throughout the entire project scope, and a precise evaluation of them is vital for the company to start working on it. To help with this cost estimation and have precise results, project managers use a tool called the cost management plan.

With a suitable template, it can calculate not only the cost baseline of your project but also help with work optimization. But for the document to work effectively, the project managers must create a solid template that reflects the main objective and the data they need to achieve it.

In this article, we will show you how to make the perfect template for project cost management. Follow each step carefully, and you’ll have the ideal tool for calculating the project budget and any other relevant information.

As the name suggests, it is a document responsible for the project cost management process during an entire project life cycle. It covers direct and indirect costs and is indispensable for any company looking for a precise calculation of the project’s budget.

The cost control goes far beyond just understanding the overall project budget. It also helps with task optimization and can help the team to save resources and supplies.

It is used throughout the project by both the company and key stakeholders, like investors, that need to be constantly updated about the cost estimates of each step and activity. The more well-structured and complete your template gets, the more precise your cost management planning will be. 

Along with helping in the project’s organization, there are numerous reasons why a project manager should always create this document. The first one is to avoid surprises or unexpected expenses throughout the project. The cost management plan ensures that every expense, directly and indirectly related to the project is covered and all project activities are listed.

Moreover, doing this helps the team to better manage project resources and control costs related to the activities. This will not only help investors to save money but will also ensure project success.

Although its primary purpose is to estimate costs and determine the project budget, it is a powerful document that can impact numerous other aspects, from the planning phase to the delivery. Everything will depend on the template you use and its featured categories.

Now that you know what a cost management plan is and why it is essential for your future projects, it is time to see how you can create your template. Follow all these steps to ensure you’ll end up with a complete document that shows everything you need, from the actual costs of it to the resources required.

The more complete and organized your document gets, the more precise your results will be. Here is everything you need to create your template:

Project Identification

The first step is to properly identify the project which the document regards. More than just making your document look better, identification is used, especially when working with multiple projects simultaneously.

With a clear identification, you can save time and optimize the entire process for all team members. The identification should include information like the project’s title, name of the manager, date on which it started, etc.

Resource Planning

Resource planning is a vital step for any cost management plan. In most projects, the manager will use a breakdown structure and separate the project into multiple steps and deliveries. These deliverables are listed in order of importance, from the essential to the dispensable ones.

This structure helps with the project organization but is also a great way to visualize which steps will require more budget and resources. It becomes clearer to visualize the project lifecycle and control costs that will be invested in each part of it.

Commonly, each step and activity requires a different budget, and to estimate costs accurately for each one, it is vital that you double-check every item to see if they were all listed. Most cost management plans feature a list based on the importance of each task, but you can decide which order is better for you.

Cost Estimation

Next is the cost estimation of your project. Don’t be afraid to change your values according to the project’s progress.

The cost estimation is also designed to change along with your steps and items. It uses different techniques to evaluate the actual cost of the project based on previous works.

Some items considered when estimating costs are your goals, knowledge, previous experiences, and other criteria.

It is recommended to prioritize determinative techniques and criteria since they tend to be more accurate. For estimating your project costs, it is also recommended that the entire process be mapped out, including scope and deliverables. This ensures more precision when calculating the determined project budget.

Budgeting

The next crucial item for an adequate cost management plan is the budgeting of your project. It is similar to the cost estimation phase but with a more detailed study of the project and its steps.

It comes right after the estimation phase for a reason. In the previous step, you mapped out the blueprint of your project. Here you’ll analyze the data collected and take a more detailed look at it.

You’ll measure the cost of each step and the determined budget for each one. This document will then be delivered to the project owner for analysis. Once you have the approved budget, you can divide the project into milestones.

Doing this is recommended because it becomes way easier to do cost planning once the project is divided into multiple steps. Your results will be more precise rather than just estimate the total cost to complete the project.

Cost Control

The last main step of your cost management plan is cost control. This simple task consists of identifying and eliminating unnecessary expenses throughout the project.

This increases your cost performance and allows you to make a successful project delivery without spending more than the estimated budget. The cost control can also make a performance measurement since you can evaluate how much of the project is being done with a specific budget.

Although cost control is the last step in the cost management plan, its efforts start way earlier. Everything is connected with cost control, from the negotiations with the suppliers and the purchase of resources. Managing costs is vital for the effectiveness of the money invested, and all the knowledge acquired in the cost control phase will be considered when executing future projects.

If you’re planning on creating a cost management document, it is recommended to do this online. There are numerous reasons for this decision.

The first advantage of keeping it online is that it can be easily accessed and shared with every party, wherever you are. An online document can not only be accessed from any place but also edited. With this, any alteration necessary can be done remotely.

Along with that, online programs also have cloud saving. This will avoid losing any important files or information stored.

You can find numerous options when it comes to the creation of your own cost management document. From known programs to specialized project management software, each one has its own tools and features to help you with this task.

Among all the options available, we highly recommend using Microsoft Excel. The software has the best tools set on the market and is an industry standard, meaning that you won’t need extra programs for your business tasks.

If you don’t have a Microsoft Office activation key, you can find one at RoyalCDKeys for a considerably lower price. This way, you can access all the features and tools you need and save money.

If you don’t want to create your cost management sheet from scratch, there is no problem. Here are some free templates you can download and edit using Excel to best suit your type of project.

Make sure to choose a template that is aligned with your objectives. This ensures that you’ll be able to gather maximum potential out of them.

Here are the templates:

Template #1

Extensive document featuring all the categories necessary for managing costs. It can be used for any kind of project and business. 

Get this template

Template #2

Project cost control template. Document featuring all the necessary information for precise cost control and budget calculation. 

Get this template

Template #3

Cost management plan for a construction project. Template dedicated to construction businesses that need a document to manage costs and project expenses.

Get this template

Evaluating and managing project costs go far beyond just calculating the necessary budget. This task helps the team to understand the best way to divide the project and identify its critical components.

Along with that, there are numerous reporting formats for this document. Depending on the categories featured, it can also be a project progress tracker and performance evaluation tool. Everything will depend on the way you build the template and its purpose.

Now that you know everything you need, it is time to start building your own cost management spreadsheet. Follow all the steps above carefully, and you’ll end up with the perfect template to calculate all aspects of your project successfully.