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7 - PROJECT COST MANAGEMENT

Updating the budget requires knowledge of the actual costs spent to date. Any increase to the authorized
budget can only be approved through the Perform Integrated Change Control process (Section 4.5). Monitoring the
expenditure of funds without regard to the value of work being accomplished for such expenditures has little value
to the project, other than to allow the project team to stay within the authorized funding. Much of the effort of cost
control involves analyzing the relationship between the consumption of project funds to the physical work being
accomplished for such expenditures. The key to effective cost control is the management of the approved cost
baseline and the changes to that baseline.

Project cost control includes:

• Influencing the factors that create changes to the authorized cost baseline;
• Ensuring that all change requests are acted on in a timely manner;

• Managing the actual changes when and as they occur;
• Ensuring that cost expenditures do not exceed the authorized funding by period, by WBS component, by
activity, and in total for the project;
• Monitoring cost performance to isolate and understand variances from the approved cost baseline;

• Monitoring work performance against funds expended;
• Preventing unapproved changes from being included in the reported cost or resource usage;

• Informing appropriate stakeholders of all approved changes and associated cost; and
• Bringing expected cost overruns within acceptable limits.

7.4.1 control costs: Inputs

7.4.1.1 Project Management Plan

Described in Section 4.2.3.1. The project management plan contains the following information that is used to
control cost:

• cost baseline. The cost baseline is compared with actual results to determine if a change, corrective
action, or preventive action is necessary.
• cost management plan. The cost management plan describes how the project costs will be managed
and controlled (Section 7.1.3.1).

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