Project Management for Office Procedures Arshdeep Singh

Assignment 1: Internet Tasks- Student Choice

To: Miss Janette

From: Arshdeep Singh

Date: 23rd October, 2022

Subject: Internet Exercise 5 – Cost Planning

Based on secondary research, cost planning can be defined as a process of estimating

costs based on a projects deliverable it can also be defined as estimating a budget and managing
costs based on what the budgeted is versus what it actually is (Edition, n.d.). The purpose of cost
planning is to forecast estimated costs for a project that will be used by project managers to
ensure there are no budget overruns, it allows managers to stay on track and also know the
timeline of expected deliverables which allows them to stay efficient and productive. It is a good
tool to cut down any unnecessary costs since it allows one to pre-plan.

The process of cost planning starts with dividing the project into tasks or specific
milestones. Each milestone or task then gets an estimated cost budget based on current market
prices; the third step is to create the budget. An ideal way to create a budget is to use software’s
where data can be stored to make it easier for managers to tally and cross check what work is
being done or already done. The last step of cost planning is monitoring the performance; this
allows one to match current progress with the estimated progress and know whether you have
been over efficient, efficient or under efficient with the project (Guide, n.d.)

This chapter teaches us to how to budget costs for a project using formulas, it teaches us
to control cost and as well as manage cash flows. Based on this chapter cost planning involves
the usage of variable such as labor, material, equipment, facilities, subcontractors and
consultants, travel and reserve costs. These variables are then used to create a projected budget
through aggregate and then cumulative budgeted costs, this allows one to conduct cost planning
for a project. Once cost planning is done one must determine the actual cost of doing the same
project and then compare the actual vs budgeted. Comparing the actual vs budgeted cost and
performance will allow the manager to understand the value of the project or where it currently
stands vs where it should’ve been, now this can be positive or negative. Once the comparison is
done managers should analyze their performance using established KPI’s. If the actual costs are
greater than the budgeted then the projectors are expected to manage cash flows to ensure the
actual does not exceed the budgeted (Determining Costs, Budget, and Earned Value, 2018)

The main difference between what the book revealed vs what the internet shows is quite
simple the book tells us the entire process of completing a project based on costs and
performance related to it where as on the other hand the internet tells us how to manage a project

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Project Management for Office Procedures Arshdeep Singh

based on performance only. The book takes cost and performance hand in hand where as in the
book the emphasis is greater on the cost and less on performance.

Thank You

References
Determining Costs, Budget, and Earned Value. (2018). In J. Gido, Successful Project
Management.
Edition, A. B. (n.d.). What is Project Cost Planning and Control. Retrieved from APM:
https://www.apm.org.uk/resources/what-is-project-management/what-is-project-cost-
planning-and-control/#:~:text=Definition,forecast%20costs%20against%20that
%20budget.
Guide, Z. M. (n.d.). What is a Cost Management Plan in Project Management? Retrieved from
Wrike: https://www.wrike.com/project-management-guide/faq/what-is-cost-
management-plan/

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