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The WBS is simply a subdivision of the project into tasks.Įach item in the Work Breakdown Structure is estimated. Prior to the estimate stage, the project has been divided into work packages in a Work Breakdown Structure (WBS). In order to be approved by the applicable authorities, the amount that the project will cost is usually a major variable. Project EstimatingĪlmost all projects need estimates. Keep in mind stakeholders tend to measure project costs in different ways, for example when an item is delivered vs. Project stakeholders should be consulted to ensure a complete buy-in prior to project execution. Funding requirements often require this type of analysis to determine when the funds will be released. The Cost Management Plan should take into account the time value of money, Return on Investment, Net Present Value, and payback period, if applicable. The Cost Management Plan is important because the project manager’s ability to influence project costs starts high and decreases as the project goes on. It provides the details of how the project costs will be estimated, tracked, and controlled. The Project Cost Management Plan is a component of the overall Project Management Plan. The key benefit of this process is that it provides guidance and direction on how the project costs will be managed throughout the project Cost Management Plan Plan Cost Management is the process of defining how the project costs will be estimated, budgeted, managed, monitored, and controlled.