To control costs on the project the PM has to monitor expenditures, prepare cost forecasts, compare realized costs against the cost baseline and manage changes to it using Change control process.
Control costs is a project management activity where actual cost of work performed is measured. It is then compared against the allocated budget for the work to understand whether team has spent more, or less than the budget.
In case team has spent more than the budget, then the project manager calculates forecasts to understand how much more budget would be required to complete the work within schedule.
In case the budget needs to be increased, project manager goes to the sponsor making a case for additional budget.
Any resultant changes to cost baseline are managed using Perform Integrated Change Control process.
Controlling project costs involves a two-step process –
- Calculate variance against baseline
- Plan corrective or preventive actions
Earned Value Management (EVM) calculation method helps you with #1 above.
One of the jobs of the project manager to control costs is to influence factors that lead to cost increase. This may involve negotiating with stakeholders to omit certain irrelevant work, for instance. Or negotiating with suppliers to reduce quotes. This may even involve working with procurement specialist to create contractual terms that de-risk cost escalation.
Apart from these the project manager has to monitor closely the expenditure with respect to cost baseline, against work progress. In other words, if work is being done within defined schedule then the risk of cost escalation is reduced.
If quality of the deliverables are maintained then external cost of quality can be avoided.
All this will naturally mean that control costs is not a one-time process to execute. Neither it is an activity done in isolation. This is a regular, almost day-to-day activity for the project manager to keep an eye on preventive measures that keeps the costs under control.







