Cost management is one of the most fundamental and important point of focus when working on a specific project. Budgets are prepared and approved before working is started on project. This budgeted plan is approved by senior management as money is arranged before project initiation. A template to monitor cost budgeted is prepared in Microsoft excel.
One of the prime duties of project manager is to make budget of expense and then keep then cost under control while working on a project. It effects the project directly as resources are distributed for individual departments and jobs in a company.
Format of cost management plan template
The way and procedure in which cost incurred on individual jobs in a company vary from business to business however a template showing and helping in cost management process is created in Microsoft excel. It is prepared for specific year and performance of company in certain month is also shown using bars. Usually 6 columns are there. They show:
- Budgeted cost (BAC)
- Actual cost (AC)
- Planned value (PV)
- Earned value (EV)
- Percentage completion
Purpose of cost management plan
It is important to calculate the difference between budgeted and actual work. It helps in making control measures which ensure avoidable expenses to be minimized. Factors which are causing a major difference between budgeted and actual cost can be identified. If actual cost is more than the budgeted cost it means more expense on the specific project and less earning percentage.
Costs are budgeted on resources available and risks faced by specific project. Variance in the cost is due to missing out in indirect expense which can come to light using Microsoft Excel template. Effective budgets can be prepared for future projects. Percentage completion of job helps in show the time which is required to accomplish a certain job therefore completing a project on time is possible.