Cost management plan

The cost management plan is a part of the project management plan. It specifies how the project costs will be estimated, structured, monitored, and controlled. The cost management plan can include the following information:

  • Level of accuracy for cost estimates
  • Units of measure
  • Variance thresholds
  • Rules for performance measurement
  • Cost reporting information and format
  • Process for estimating costs
  • Process for developing a time-phased budget
  • Process for monitoring and controlling costs

In addition, the cost management plan may include information on the level of authority associated with cost and budget allocation and commitment, funding limitations, and options and guidelines on how and when costs get recorded for the project.

The cost management plan can receive information from the:

  • Project charter
  • Schedule management plan
  • Risk management plan

It provides information to:

  • Activity cost estimates
  • Cost baseline
  • Risk register

The cost management plan is an output from the process 7.1 Plan Cost Management in the PMBOK® Guide – Sixth Edition. It is developed once and does not usually change.


Tailoring tips

Consider the following tips to help tailor the cost management plan to meet your needs:

  • On smaller projects, often the project manager does not manage the budget. In those cases you would not need this form.
  • Units of measure for each type of resource may be indicated in the cost management plan or the resource management plan.
  • For projects that use earned value management, include information on rules for establishing percent complete, the EVM measurement techniques (fixed formula, percent complete, level or effort, ). For those that don’t, delete this field.



The cost management plan should be aligned and consistent with the following documents:

  • Project charter
  • Schedule management plan
Document element Description
Units of measure Indicate how each type of resource will be measured. For example, labor units may be measured in staff hours, days, or weeks. Physical resources may be measured in gallons, meters, tons, or whatever is appropriate for the material. Some resources are based on a lump sum cost each time they are used.
Level of precision Indicate whether cost estimates will be rounded to hundreds, thousands, or some other measurement.
Level of accuracy Describe the level of accuracy needed for estimates. The level of accuracy may evolve over time as more information is known (progressive elaboration). If there are guidelines for rolling wave planning and the level of refinement that will be used for cost estimates, indicate the levels of accuracy required as time progresses.
Organizational procedure links Cost estimating and reporting should follow the numbering structure of the WBS. It may also need to follow the organization’s code of accounts or other accounting and reporting structures.
Control thresholds Indicate the measures that determine whether an activity, work package, or the project as a whole is on budget, requires preventive action, or is over budget and requires corrective action. Usually indicated as a percent deviation from the baseline.
Rules of performance measurement Identify the level in the WBS where progress and expenditures will be measured. For projects that use earned value management indicate whether costs will be reported at the work package or control account level. Describe the measurement method that will be used, such as weighted milestones, fixed-formula, percent complete, etc. Document the equations that will be used to forecast estimates to complete (ETC) and estimates at completion (EAC).
Cost reporting information and format Document the cost information required for status and progress reporting. If a spe- cific reporting format will be used, attach a copy or refer to the specific form or tem- plate. Indicate the reporting frequency.
Additional details Describe variables associated with strategic funding choices, such as make or buy, buy or lease, borrowing funds versus using in-house funding, etc.


Form sample