Project Management Plan Template

This assignment presents a comprehensive project management plan template outlining key elements such as project scope, schedule management, cost estimation, risk identification and mitigation, and communication strategies. It includes a breakdown of the budget, a change management plan, and emphasizes the importance of documenting lessons learned throughout the project lifecycle.

Cost Management Plan
Name of the university
Student’s name
Dated:

Cost Management Plan
Table of content
Introduction......................................................................................................................................3
Cost Management Approach...........................................................................................................3
Measuring the Project Cost..............................................................................................................4
Reporting format for the Cost Management....................................................................................5
Response process for the Cost variances.........................................................................................6
Change Control process for the Cost parameters............................................................................6
Breakdown of Project Budget..........................................................................................................7
References........................................................................................................................................8
Page | 2

Cost Management Plan
Introduction
This document the Cost Management Plan for the ‘Talent Contest’ is developed to provide
information regarding one more and important knowledge area that is ‘Project Cost
Management’. The first deliverable of the stage is ‘Cost Management Approach or Plan’, and
then is the ‘Cost Estimation’, ‘Develop Budget’ and finally the ‘Cost Control’ (CertChamp,
2017). All the sections shall be discussed in detail and need to be developed as part of the cost
management plan. In the subsequent section the plan to manage the cost of ‘Talent Contest’ shall
be discussed.
For the project ‘Talent Contest’, the Cost Manager, shall be responsible for developing the
budgeted cost of the project. Once the budget is approved, the Project Manager will manage it
throughout the project lifecycle. Each and every stage the Project Manager shall discuss the
status and issues which are arising during the project lifecycle.
For managing the cost, the Project Manager needs to always keep a track of cost performance
figures using earned value management throughout the project and also present them before the
Project Sponsor and other senior executives at a regular agreed interval.
But before the cost figures and the techniques of managing the cost are presented, they shall be
approved by the Project Sponsor (Project Management Knowledge, 2017). The Project Sponsor
shall remain responsible for approving the changes in the cost baseline figures; if at all any
change requirement arises during the project lifecycle.
Cost Management Approach
The cost of the ‘Talent Contest’ project shall be managed at the lowermost level of the WBS.
Since the cost developed for the project is based on the bottom-up estimation method (Makar,
2015), so it can be easier and will definitely provide accurate data throughout the project. Unit
rate of the resources shall be assigned in the MS project software to develop the overall cost
estimation of the project as per the bottom-up estimation process.
The cost accounts of the project shall be developed at the lowermost WBS level, which is just
above the activity level to monitor the earned value figures, this level is often called the work
package. Once the project starts making progress, there shall be expenditures too and then all the
Page | 3

Cost Management Plan
cost actuals shall be captured at the work package levels and as much as possible the cost shall
be captured at the activity levels to maintain accuracy level and these figures shall also act as the
historical figures for the future similar kind of talent contest project.
Now the variances which may develop during the project lifecycle, with +/ - 0.15 in the cost
progress lists and the time progress will change the status of the time and cost to preventative; all
things considered, those qualities will be changed to yellow color to highlight and show the
concern in the progress and concern reports. Moreover, the variance figures with +/ - 0.25 in the
cost files will change the status of the cost to an alarming stage and the Project Manager need to
blow the whistle to grab the attention. Thus the whole figures in such cases shall be changed to
red in the progress and concern reports. All the activities and the figures shown in red color are
the real trouble, so require remedial activity from the Project Manager so as to bring the cost
underneath the controllable level. All the changes advised by the Project Manager shall be
considered and approved by the Project Sponsor before being reflected in the baseline schedule
of cost and its impact on the time.
Measuring the Project Cost
Earned Value Management (EVM) technique is the best process of measuring the project cost
due to its accuracy and proven analytical method to calculate the estimated future figures such as
EAC (Estimate At Complete) & ETC (Estimate To Complete) (Humphreys & Associates, 2017).
The EVM method will capture the actual figures obtained from the execution progress or else be
taking the budgeted cost of the activity as the actual cost once the activity is completed 100%
using the MS Project Software.
Once the actual figures are captured in the schedule against each activity level, the software shall
automatically calculate the variance and EVM figures and produce the EVM statistics for
projecting the future estimated figures.
Main four figures which can provide enough information regarding the status and condition of
the project are SV (Schedule Variance), CV (Cost Variance), SPI (Schedule Performance Index)
and the CPI (Cost Performance Index). SV & CV are compared against the planned and earned
values the PV & EV and AC (Actual Cost / Expenditure).
Page | 4

Cost Management Plan
The calculation formulas are:
SV =EV – PV , CV =EV – AC SPI=EV ÷ PV & CPI=EV ÷ AC
In an ideal condition, the project shall have SV & CV both as zero and hence the SPI & CPI shall
remain 1, which means the project is running perfectly as per the planning schedule and
estimated budgeted cost. But the issue arises when the SV & or CV is less than zero and
subsequently the SPI & or CPI is below 1. As discussed above, whenever the SV or CV goes
below -0.15 and SPI or CPI goes below 0.85 shall be projected as yellow color and at the same
time whenever the SV or CV goes below -0.25 and SPI or CPI goes below 0.75 shall be
projected as red color and special attention need to be taken to get back the figures and the
project on track.
Reporting format for the Cost Management
The cost management report shall be reported to the top management and the Project Sponsor on
the Monthly basis or as per the desired interval. The format for reporting the cost figures are:
WBS
Level
Estimated
Cost
PV EV AC SPI CPI EAC VAC*
1
1.1
1.2
1.2.1
* VAC = variance at complete (means the extra cost projected to complete the project), +ve
value means the additional cost and –ve value means the less cost than budgeted value.
All the backlogs of the EVM figures shall be provided with the reason for the issue or the delay
or backlog and the catch-up plans. The corrective actions need to be presented in the report and
the name or designation of the person responsible for the action shall also be notified to make the
individual responsible and make the job happen in right time & spirit.
Page | 5

Cost Management Plan
Response process for the Cost Variances
The cost variances shall be observed against the threshold limits of the ‘Talent Contest’ project.
The project cannot be delayed a single day due to the constraint of the even day, so the project
shall be completed at any cost to achieve the main objective of the project.
Since the threshold limits of the project range with the +/- 0.15 to +/- 0.25, so anything above or
below the range shall be presented with the corrective actions by the Project Manager to the
Project Sponsor. The project manager shall present the variances with the corrective actions like,
reducing the scope of work or the facilities which are planned for the project or reducing the
quality of items like PA system, in place of budgeted 3 systems, the Project manager may
suggest using 2 systems. It remains the sole decision of the Project Sponsor to decide among the
options provided to bring the cost figures back on track. Moreover, all such learning shall be
documented in the lessons learned document (Sommers, 2009).
Change Control process for the Cost parameters
In case of any changes in the above discussed cost parameters of the ‘Talent Contest’ project, the
reasons for the change, along with the probable ways or methods to counter them, either by
changing the scope quantity, or increasing the cost of the project shall be presented by the
Project Manager to the Project Sponsor with detailed analysis report.
Further to this step, all the subsequent steps shall be followed as per the change control process
documented in the ‘Change Management Plan’ and accordingly the outcome shall be reflected
back to the baseline figures to track the project against new or revised facts and figures.
Moreover, again as discussed in the upper section all the lessons learned must be documented
then and there to provide the accurate data and reasons and avoid providing at the end when we
may not be in a position to provide.
Page | 6

Cost Management Plan
Breakdown of Project Budget
The budget of the project is shown below:
Items Total Work Hours* Estimated Cost
Manpower Cost:
Project Manager @ $ 120 / Hr. 640 hrs $76,800.00
Project Team Members @ $ 85 / Hr. 552 hrs $46,920.00
Material Cost:
Equipment 3 Nos. $1,500.00
Subtotal - $ 125,220.00
Management reserve (for the unknown
risks) @ 10% of the subtotal - $ 12,522.00
Overall Cost Estimate - $ 137,742.00
* The ‘Total Work hours’ is calculated from the ‘Schedule Management Plan’ and
multiplied with the unit rate has developed the cost figures for the manpower and
material.
Approval by the Project Sponsor:
_________________________________
(Signature)
<Project Sponsor>
Page | 7

Cost Management Plan
References
CertChamp. (2017). Project Cost Management. Retrieved October 13, 2017, from
http://www.certchamp.com: http://www.certchamp.com/pmp_cost_management.jsp
Humphreys & Associates. (2017). EVMS Education Center Basic Concepts of Earned Value
Management (EVM). Retrieved October 13, 2017, from www.humphreys-assoc.com:
https://www.humphreys-assoc.com/evms/basic-concepts-earned-value-management-evm-
ta-a-74.html
Makar, A. (2015, January 27). Top-Down vs. Bottom-Up Project Management Strategies.
Retrieved October 13, 2017, from www.liquidplanner.com:
https://www.liquidplanner.com/blog/how-long-is-that-going-to-take-top-down-vs-
bottom-up-strategies/
Project Management Knowledge. (2017). Cost Baseline. Retrieved October 13, 2017, from
https://project-management-knowledge.com: https://project-management-
knowledge.com/definitions/c/cost-baseline/
Sommers, A. (2009, February 22). Tips for Turning Lessons Learned into Best Practices.
Retrieved October 13, 2017, from Project Smart: https://www.projectsmart.co.uk/tips-for-
turning-lessons-learned-into-best-practices.php
Page | 8