Cost Management

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Description

Cost management (as opposed to financial management) is an essential component of the Project Plan. It involves planning, estimating, monitoring and control of the total project costs throughout all phases of the National Project Management System (NPMS). The diagram below describes the evolvement of project costs estimates in relation to the NPMS Model.

Development of Project Construction Cost Estimate – Image Description below.

A larger image of the NPMS Cost Management model is available on a separate page.

The above diagram describes how cost estimates relate to the National Project Management System (NPMS) Model. In cases where funding approval is not obtained, the project may need to repeat earlier phases in order to provide the basis for a new funding submission. Note that when combined Preliminary Project Approval (PPA) and Effective Project Approval (EPA) are sought (such as for a Lease Project Approval), a substantive estimate is not required for funding approval.

The NPMS Real Property Procedure on Cost Management has been developed to describe the components and requirements of NPMS as applied to the management of real property projects costs.

Objective

To ensure that total project costs are established and managed in a systematic manner through effective and timely monitoring and control that applies throughout the phases of a project as defined in NPMS.

Real Property Context

Cost management in real property projects commences from the initial inception and it continues right up to its completion and turnover. The ability to maintain the total project cost within budget (project cost limit/target) is one of the key measures of success of a project. Therefore, it is important that comprehensive and structured processes and techniques are adopted in cost management. The primary elements of cost management are estimating, planning, analysis and control. These must be utilized interactively throughout all phases of a project as defined within NPMS, in order to maintain consistency of control over the total project cost. The level of application of cost management techniques may vary based on the project size, complexity, funding approvals, and its level of completeness of design and the client requirements.

In order to achieve success with cost management of real property projects, project managers should ensure the inclusion of cost management discipline throughout the phases of their project. The cost management expertise is available through Public Works and Government Services (PWGSC/PSPC) Cost Planners and also from qualified professional cost consultants.

The Real Property Branch (RPB) has created a national Cost Management Unit located in the National Capital Area to promote the use of consistent and systematic cost planning, cost monitoring and cost control systems in order to improve performance and to meet the forecasted cost limits of projects. This Unit is also responsible to promote increased visibility on full performance measurement, through integration of cost management.

Cost Management Toolkit

Cost Forms and Related Links

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Highlights