Components of the Cost Management Plan in Construction Projects

Components of construction project’s cost management plan comprise a cost control system, cash flow plan, and a reporting system. The cost management plan establishes the format and conditions you can use to plan for construction project costs. It outlines how you will estimate, budget, and control project costs. The cost management plan is a subsidiary of the project management plan.

It describes the process that will use to manage the project budget including tracking expenditures, future expenses, identifying budget overruns and evaluating overall spending. These components of the cost management plan can be covered:

Roles and Responsibilities

You can describe different roles and their ability to access the project budget. For example:

Project manager. (The project sponsor owns the money from a business perspective, but the project manager owns it from a budget perspective.)

Who can approve expenses? It is important to identify up-front. It is possible that only the project manager can approve project expenses, but in some instances this can be delegated to someone closer to the cost. For example, if you have contractors working within project teams, it is possible that the team leader will be authorized to approve the timesheets for these contractors.

Who can read? The budget numbers may or may not be sensitive information. You should decide who else can have access to the actual expenditures and budget information.


You should describe the timing of budget analysis. On many projects, this may be monthly since that is the frequency most General Ledger reports are available. On some projects, the expenses may need to be tracked weekly, even if it is a manual process.

Cost Management Plan 2


Cost plan describes how the budget feedback will be delivered. It is probably going to be automated reports from your financial system or a manual tracking process, or both.

Budget Change Review and Approval

Where you define the process required to evaluate and approve proposed budget changes. It represents the authority for accepting and approving changes to the budget. This process does not include supporting individual expenses during the project. It applies to changes in the overall project budget. It is possible that the project manager may have some discretion to exceed the budget by a certain percentage, but after that threshold some formal body may need to approve the change.


Describe any budgeting tool that will be used on this project, who will have access to the tool and what various people can do with the tool (read the budget, update numbers, etc.)


Comment here on the types and names of reports you are using to manage the budget, who will receive them, the frequency, etc.

Budget Integration

Each project keeps an independent budget, but in some instances your master budget is the result of a roll-up of other underlying budgets. It is also possible that your budget could be integrated and rolled up to a higher-level program or portfolio budget.

Typically, cost management plan is not needed for all construction projects. However, if you have a large project and large budget, you might want to plan ahead for how the budget will be allocated and managed. Think through and complete a Cost Management Plan if it provides value to your project.

Scroll to Top