Depending on the organization you work for and the project you are working on, the Project Manager may or may not be managing the project budget and costs. If you are tasked to do this, include Cost Management as part of your Project Management Plan.
The Cost Management Plan addresses the following:
• Defines what resources (human, hardware, software, services, facilities) will be considered part of the project costs and when it will be base-lined
• Defines how costs will be reported and who will approve invoices and internal costs
• Defines the magnitude of cost changes that will be subject to formal change management
• Includes a plan for change management: How change is requested, authorized, and documented
• Reference the Project Charter for the priority of Cost in the triple constraints
If cost is the highest priority in your project triple constraints, Cost Management becomes a critical activity. You want to not only record and track costs that have already been incurred, but you also must do new cost projections on a regular basis. As more is known about a project, cost projections will become more accurate.
A former manager of mine once told me that if your costs incurred + future projected costs exactly equals your budget, then you are not doing accurate cost projections. This is based purely on the laws of probability. The probability of your actual and projected costs EXACTLY matching a budget created before the project began is very low.
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